m&a uses of going public with an ipo or reverse merger
TRANSCRIPT
![Page 1: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/1.jpg)
www.securities-law.info
M&A Uses of Going Public with
an IPO or Reverse Merger
![Page 2: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/2.jpg)
Disclaimer
This is not legal or investment advice of any kind
Seek competent advice from qualified attorneys and investment bankers
Your situation may vary
The more you know about finance and business, the more you can profit
![Page 3: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/3.jpg)
Using an IPO as an M&A Tool
In mergers and acquisitions (M&A), going public through an IPO or reverse
merger is a valuable and flexible tool that can increase profits and
lower the cost of capital
![Page 4: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/4.jpg)
Sellers: Increase Your Valuation
Being public may increase your valuation in a transaction where you are being acquired
![Page 5: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/5.jpg)
File a Confidential S-1 to Test Waters
File a confidential S-1 under the JOBS Act may put pressure on a buyer
You can “test the waters” for an IPO
Buyers have to compete with IPO price
![Page 6: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/6.jpg)
Letter of Intent with an Underwriter
Signing a letter of intent with an underwriter can force a
buyer to make an offer
Naturally, the price will be increased as you always have the option of the
higher priced IPO
![Page 7: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/7.jpg)
Selling to Public Company
A public company that wants to buy you will be more comfortable if your financial reporting is already up to SEC standards
![Page 8: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/8.jpg)
Accounting
Many companies want sellers to have audited financial statements.
As that expense is a big part of the cost of being public, why not do an IPO as you have already incurred a large part of the total cost?
![Page 9: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/9.jpg)
Establish Value for Taxes
You may want to establish a value for the company for estate tax or other purposes, such as dressing up your personal financial statements
![Page 10: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/10.jpg)
Estate Taxes
You may want a public market to sell securities to pay estate taxes, or have the option of selling stock to pay estate taxes instead of facing a fire sale of the company
![Page 11: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/11.jpg)
Key Employees
You may want to keep the loyalty of key employees in a company you are buying – offer them stock options in your public company
![Page 12: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/12.jpg)
Reduced Overall Financing Costs
You may want to reduce your overall financing costs and find that equity is a cheap part of the mix.
![Page 13: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/13.jpg)
Increase Your Equity Base
You may want to increase your equity base after incurring a large amount of debt in an LBO
![Page 14: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/14.jpg)
Reduce Debt
You may want to raise money to reduce or pay off debt incurred during a leveraged buyout
![Page 15: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/15.jpg)
Giving Liquid Stock to Sellers
You may want to offer the sellers some securities, (common, preferred or debt) to reduce the cash used in buying the company
Sellers naturally want these securities to be liquid
![Page 16: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/16.jpg)
Buy Out Dissident Shareholders
You may want to buy out dissident or troublesome shareholders
![Page 17: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/17.jpg)
Sell into Hot Market
If your company is in an industry that is being overvalued by Wall Street, you may want to take advantage of this bubble pricing
![Page 18: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/18.jpg)
IPO Instead of Vulture Capital
If venture capital companies are offering you inadequate terms or trying to impose agreements that put you at a disadvantage, you may want to seek an IPO instead of venture capital
![Page 19: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/19.jpg)
Break VC Covenants
Use an IPO to break out of venture capital covenants, such as right of first refusal on sales
Typically, these end after an IPO
![Page 20: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/20.jpg)
Attractive Valuations
You may believe that the public market will offer you more attractive valuations than venture capitalists
![Page 21: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/21.jpg)
Liquidity
Your venture capitalists or other investors may demand liquidity
You yourself may want liquidity or the ability to create liquidity when you want it
![Page 22: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/22.jpg)
Reduce Control of Outside Investors
You may want to reduce control of outside investors and VCs
![Page 23: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/23.jpg)
Avoid Crushing Leverage
If leverage is crushing the company, you may want equity from an IPO
![Page 24: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/24.jpg)
More Financing Options
You might do an IPO if you want more options for future financing
![Page 25: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/25.jpg)
Lender Wants Reduced Risk
If your lender insists, you may go public
A bank lender may want to decrease its loan risk
![Page 26: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/26.jpg)
Keep Control
You may want to do an IPO if the current control shareholders want to keep control
![Page 27: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/27.jpg)
Spin Off Assets
An IPO can be used to spin off assets, or if the company wants to spin off or split up
![Page 28: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/28.jpg)
Earn Outs
An IPO can facilitate the use of earn out provisions to make both the buyer and seller happy with the terms of a deal
![Page 29: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/29.jpg)
Future Acquisitions
If you want to acquire other companies later on for stock or cash, you will want to be public
![Page 30: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/30.jpg)
Popular Industry
In considering an IPO, you need to look at the popularity of your industry, and how the IPO market is likely to be doing by the time you are trading
![Page 31: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/31.jpg)
Get the Data You Need
Questions – email me at Lux.investor@ gmail.com
Subscribe to my blogs Www. Reverse-merger.info Www. Go-public. Info (727) 656-5504
![Page 32: M&A Uses of Going Public with an IPO or Reverse Merger](https://reader031.vdocuments.mx/reader031/viewer/2022020218/55a7a5d91a28ab93198b4744/html5/thumbnails/32.jpg)
Get my books on Amazon.com