Attorney Laura Anthony and Securities Industry Experts Clarify the Realities of Taking a Private Company Public

Sep 12, 2016, 11:24 ET from Legal & Compliance, LLC

WEST PALM BEACH, Florida, September 12, 2016 /PRNewswire/ --

Pubco CEO, officers and directors fall into two camps: "Going public was the best decision we ever made," and "If we knew then what we knew now, we would have stayed private."

There is a very simple reason that going public transactions like IPO's and reverse mergers  go bad. The control persons who decided to access the public markets were most likely authorities and experts in their respective fields - biotechnology, communications, transportation and entertainment. However, they lacked a fundamental understanding of what is involved in going public, and successfully staying public.

Taking a private company public is nothing short of creating a new company on top of an existing company. The private company was built with careful planning, persistence, and the ability to adapt. The formation of the public version of the subject company requires just as much meticulous effort.  

Considerations Prior to Going Public

Prior to even making the final decision to go public, the control persons of the private entity should carefully conduct a SWOT analysis by assessing their strengths, weaknesses, opportunities and threats. More importantly, they need to clearly identify and understand why they want to go public in the first place.

Jason Paltrowitz is the Executive Vice President of Corporate Services at OTC Markets Group Inc. OTC Markets Group's financial markets, including the OTCQX and OTCQB, provide investors with the information necessary to intelligently analyze, value and trade 10,000 U.S. and global securities.

"Having a publicly traded stock can provide enormous advantages to companies that are ready - from the ability to raise capital from the public markets and a public market valuation to increased visibility with customers, partners and investors and the ability to attract and incentivize top-notch talent," Paltrowitz said. "My advice to private companies that are considering going public - whether via the new SEC Regulation A+, a Slow PO or other method - is to have in place a strong management team and team of advisors (legal, accounting and potentially an IR firm), have your financial statements in order and select the public market that is the right fit for your business."  

Generally speaking, CEO's and directors of private companies believe that going public means the end of their capitalization concerns. The urban legend surrounding going public is that money simply falls from the sky. The money may indeed fall, but at first it's going to fall out of the company's coffers.

Business plans, PCAOB audits, legal fees, and manpower all cost money. If existing officers are reassigned to prepare the company to go public, the quality of their previous duties may become compromised. If new executives are hired to groom the private company to become public, payroll expenses will increase. Either way, the subject company's bottom line will be impacted.

The old adage of having to spend money to make money directly applies when taking a private company public.  

Read the full story in The Huffington Post.

The Author:

Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size OTC and exchange traded issuers as well as private companies going public on the over-the-counter market, such as the OTCQB and OTCQX or an exchange such as NASDAQ or NYSE MKT. Legal & Compliance, LLC is a comprehensive corporate, securities and business transactions law firm assisting clients in all aspects of commerce, including initial public offerings, reverse mergers, registered public offerings, exempt private offerings, all forms of complex corporate finance transactions, compliance with national exchanges such as the NASDAQ and NYSE MKT and the over-the-counter market trading platforms such as OTCQB and OTCQX, compliance with FINRA and DTC, strategic planning for unique management and ownership issues, and broad-scope legal services. Laura Anthony, Esq. is an approved OTCQX Advisor (DAD/PAL).   Laura Anthony, Esq., is also a contributing blogger to The Huffington Post, the creator and author of and the producer and host of, The Securities Law Network.


Laura Anthony, Esq.
Founding Partner
Legal & Compliance, LLC

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