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I am with a one year old startup. We had an offer to get public a couple of days after we started the company and nowadays more and more people ask me that. Reverse mergers and Capital Pool Companies seem to be the norm offerings. Seems kinda early given that we have no sales even though we plan to launch soon. Does this happens a lot to startups? Thank you. Best Regards, Ovidiu |
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In almost every case, it's a really, really, really bad idea. Usually, the only winners are the people who arrange these transactions. The problem is that BEING public is expensive -- there are periodic and episodic reports that have to be filed, accounting fees increase, and liability goes up. Meanwhile, because there's no sale of new stock, there's no cash infusion to the company. You've potentially given your investors an easier way to sell their shares, but into an exceedingly thin market. And, in doing so, you open your company up to pump-and-dump schemes and other criminal enterprises. |
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