One way to grow your company to a size where it will attract interest from large U.S.institutional investors, hedge funds and FINRA broker/dealers is to acquire other businesses. Why does going public in theU.S.capital markets through a Go Public Direct transaction help you acquire other businesses?
The Answer Is: Because you can pay for the other businesses with your company’s stock rather than your cash, your company’s stock becomes an accepted form of currency for acquisitions.
If you are a private company, what owners of other businesses would want your stock as consideration for selling their business to you? You would take another company’s private stock as payment if you sold your business. They won’t either.
But go public in theU.S.capital markets and this all changes. You have prestige and credibility. Your stock trades. The seller of the business gets the same liquidity that your investors are looking for. And because your stock trades, it is much easier to put a value on it when deciding how much of your stock you must pay to acquire another business.
However, as many China Reverse Merger companies have discovered, going public with a reverse merger with a public shell may in fact end up destroying your company’s ability to acquire other businesses by using your stock as currency. Why? You don’t go through the rigorous SEC review process, which can lead to substantial problems down the road.
Going Public in a Go Public Direct transaction puts your company on firm ground with the SEC before you enter into the public arena. All of your future required public filings like 10-K’s and 10-Q’s are based upon disclosure that has been thoroughly vetted by the SEC in the review process.