"Going public" explained:
Going public (or participating in an "initial public offering" or IPO) is the process in which a business owned by one or several individuals is converted into a business owned by many. It involves the offering of part ownership of the company to the public through the sale of debt or more commonly, equity securities (stock).

Advantages of Going Public

The advantages of public trading status, which are outlined in greater detail below, notably include the possibility of commanding a higher price for a later offering of the company's securities. Going public through a reverse merger allows a private company to go public typically at a lesser cost and with less stock dilution than through an initial public offering (IPO). While the process of going public and raising capital is combined in an IPO, in a reverse merger (also know as a "blind pool" merger) these two functions are unbundled; a company can go public without raising additional capital. Through this unbundling operation, the process of going public is simplified greatly. The private company which has gone public obtains the benefits of public trading of its securities, namely:

• Increased liquidity of the ownership shares of the company
• Higher share price and thus higher company valuation
• Greater access to the capital markets through the possibilities of a future stock offering
• The ability of the company to make acquisitions of other companies using the company's stock
• The ability to use stock incentive plans to attract and retain key employees
• Going public can be part of a retirement strategy for business owners

There are two ways for a Private company to go public:

• An Initial Public Offering (IPO), or
• A merger with an existing public company commonly referred to as a Reverse Merger

Initial Public Offering (IPO)
Before the bubble burst in the stock market, the hottest ticket in the brokerage environment was getting on the IPO of the latest high tech and dot com stocks. But what is IPO?
An IPO is the Abbreviated term for an Initial Public Offering. It is the process where a company sells shares to public investors for the first time.

How does an IPO work?
First, a company must retain an underwriter, which is a Wall Street firm that manages the whole IPO process. The underwriter then performs due-diligence; that is, investigate the company to see if it is not faking its financial, failing to disclose shady backgrounds of management and so on. Generally this process may take anywhere from 2-4 months depending on the complexity of the business operations, and various independent audits. Next, the underwriter assembles a team that includes Public Relations (PR) firms, printer, law firm, and financial auditor to begin the filing process. The length of this process varies between three weeks to 2 months depending on experience of the lead underwriter, and the cohesiveness among all participants. Once filing completes, the underwriter conducts a road show. Top executives of the company travel to a variety of cities and make presentation to institutions and brokerage firms for several weeks. The underwriter then collects indications of interest and determines pricing of the public offering. As best as possible, the underwriter attempts to price the issue high enough to give the company enough capital to grow, while at the same time pricing the issue low enough to create an increase in the stock price to satisfy investors.
Transforming a company from privately held to publicly owned can produce much-needed capital to finance acquisitions and expansions. But the process, which can last up to four to five months, also can take an emotional and physical toll on company and its executives. For company executives, going public is a "a combination of elation and frustration," said Tom Avery, director of investment banking with Interstate/Johnson Lane

Reverse Merger
Did you know Allied Waste Industries (NYSE:AW), Blockbuster Video (NYSE:BBI), Occidental Petroleum (NYSE:OXY), and Waste Management (NYSE:WMI) all became public through reverse mergers?
The reverse merger process has also been utilized by many successful and well known business people such as Ted Turner, Anthony Robbins, and Muriel Siebert. Getting your company listed and going public has never been easier. These days it is not uncommon to raise $100M venture capital in a public float.

What is a Reverse Merger?
A "reverse merger" is a method by which a private company goes public. In a reverse merger, a private company merges with a public listed company with no assets or liabilities. (The public company is also called a "shell" corporation). The publicly traded corporation is called a "shell" since all that exists of the original company is its corporate shell structure. By merging into such an entity, a private company becomes public.
The private company merges into a public company and obtains the majority of its stock (usually 90%). The private company normally will change the name of the public corporation (often to its own name) and will appoint and elect its management and Board of Directors. The new public corporation has a base of shareholders sufficient to meet the 300 shareholder requirement for admission to quotation on the NASDAQ SmallCap or OTC Market.

The BENEFITS   of going public through a reverse merger, as opposed to an IPO, are the following:

• The costs are significantly less than the costs required for an initial public offering
• The time required is considerably less than for an IPO
• Additional risk is involved in an IPO in that the IPO may be withdrawn due to an unstable market condition even after most of the up-front costs have been expended
• IPOs generally require greater attention from top management
• While an IPO requires a relatively long and stable earning history, the lack of an earning history does not normally keep a privately-held company from completing a reverse merger
• The company does not require an underwriter
• There is less dilution of ownership control
• You will receive a higher valuation for your company

Requirements   prior to entering into a reverse merger are the following:

• A private company will require approval of the majority of its stockholders for a merger with a public corporation

Once a company is taken public through a reverse merger the financial markets hold the following future prospects in the capital markets for the newly public corporation:

• The market value of a public company is often substantially higher than a private company with the same structure in the same industry
• Capital is easier to raise for public companies because the stock has market value and can be traded
• There is less dilution of ownership control
• The public trading price of the public company's securities serves as a benchmark for the offer price of a subsequent public or private securities offering
• Acquisitions can be made with stock since publicly traded stock is viewed as currency for mergers and acquisitions
• Form S-8 stock can be issued for officers, directors and consultants
• If the stock dividend distribution included warrants, the new company can receive proceeds from the exercise of those warrants if the trading price of its common stock exceeds the exercise (strike) price of warrants.

Typical Public Shell Structure

Here is a profile of a typical public shell corporation available for a reverse merger with your private business. This corporation is registered with the S.E.C. and is a fully reporting company.

1. The company is a reporting company under the Exchange Act of 1934. The company is current with all its filings.
2. The company was formed to be a vehicle for merger with a private company, and is free of operating history, assets (other than its nominal capitalization) or liabilities, existing or contingent.
3. The company is incorporated in Delaware, with capitalization of 20,000,000 common shares and 5,000,000 preferred shares.
4. There are 5,000,000 common shares issued and outstanding. No preferred shares have been issued, and no rights, warrants, options or commitments exist for any other common or preferred shares.
5. One of our associates, who is a securities attorney, will transact the merger.
6. Assuming the co-operation of the client company in furnishing necessary information, obtaining action of its board, etc., you may expect the completion of the merger within 14 days.
7. Audited Financials: show no liabilities and no material assets.
8. The cost for the transaction is anywhere from $95,000 to $150,000.00, in U.S. Dollars, which includes legal fees. Progress payments are acceptable in three installments: The first due when work is commenced, the second when the SEC filing is made, and the final when the Form 211 is filed. If you cancel the engagement after preparation of the SEC filing is commenced, all of this fee will be retained. We may also retain a minimum of 6% of the merged company.

Steps in Taking your Company Public Via a Reverse Merger

Shell Profile:
The company was formed to be a vehicle for merger with a private company, and is free of operating history, assets or liabilities, existing or contingent.

Quick Response:
Submit the questionnaire and our investment committee will make analysis concerning your enquiry and respond in a timely matter. We prefer to make a public shell corporation available to a going concern, profitable private company. However, we have made shells available to start-ups when there is key management in place, when a great idea or concept has been developed and substantial funding or seed capital is available.

How Long Until Trading:
This process is demanding and time sensitive to both the client company and the public shell company. Assuming the co-operation of the client company in providing all necessary information, obtaining action of its Board of Directors and providing audited financial statements within the required time, you may expect to be trading in 60 to 90 days after execution of the agreement, subject to documents provided for due diligence process.

The Process:
One of our principals is an attorney specializing in securities law and related corporate and federal taxation matters who will provide all documents and filings required to complete the Transaction. Legal fees for the completion of "the business combination" and all filings to become a trading company are included

The Cost:
The cost for the transaction is from $150,000 to $500,000 USD, which includes legal fees.

Following the Reverse Merger

It is essential that public companies, especially newly public companies, actively maintain and manage a financial communications program.
A newly formed public company needs to be well advised to invest in consulting services, to plan and execute a strategy for building and maintaining a active interest in your company within the financial community.
Consultants are available to assist public corporations in providing corporate relations services intended to increase awareness of your company on Wall Street.
For most firms, re-capitalization and stock value appreciation would seem reasons enough to be publicly owned, but there are other advantages that a company can gain. A public company has broader equity base, thus increasing its opportunities for obtaining financing for future projects. Increasing the bottom line net worth of a company, as well as its debt to equity ratio, enables it to borrow lower interest rates from traditional institutions.