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One of the most dynamic and significant processes in the world of high finance is mergers and acquisitions (M&A). These transactions can run into the hundreds of millions, if not billions, of dollars. In fact, investment banks have entire departments dedicated to establishing strategies and guidelines for bringing together two companies. Let’s take a look then at these often headline grabbing corporate activities. Thought the name M&A lumps them together, an acquisition and a merger are different things. An acquisition is a situation where one company takes over another. A merger is a case where two companies, generally of equal size, join together and combine their organizations and in so doing, create a brand new company. After a merger, old company stocks are no more and a new stock is issued. For businesses, the idea behind acquisitions and mergers is that the joining the two companies will have more value than when they are separate. Both parties hope to become enhanced by combining resources after the union. For example, costs can be cut with staff reductions. Many times after mergers or acquisitions, there is an overlap in jobs throughout the different departments, such as accounting. Any business synergy created is not limited to just savings from reduced staffing. Economies of scale can also take hold. For example, the new larger company can posses greater purchasing power than the two “smaller” companies and thus by extension save money on product parts and so lower their cost to produce a product. Additionally, a union can increase market reach, product visibility, and research and development effectiveness. As for business structure, there are a few types of mergers. One common type is called horizontal merging. This is when two companies in direct competition with one another, selling like products in the same market, decide to join together. Another form of combination is a vertical merger. This is accomplished when two companies producing two different product lines come together to offer a new type of finished product. An example of this would be an ice cream cone manufacturer hooking up with an ice cream producer to offer a new ice cream novelty. The world of mergers and acquisitions is wide and sometimes pretty complex. They might be hostile or they may be cooperative. They might involve enormous cash purchases or stock swaps. They may ultimately boost the viability of the company. Yet if mismanaged, a merge or acquisition may bring about a company’s decline. Looking for comprehensive info on mergers and acquisitions? Get the exclusive inside skinny instantly in our guide to all you need to know about online due diligence risks. |
Posts Tagged ‘ipo’
A Basic Study Of Mergers And Acquisitions
Friday, June 3rd, 2011The Benefits Of A Business Going Public
Wednesday, January 27th, 2010| Scentsy | Flameless Candles | Wickless Candles |
After a company has been in business for a while and begins to see success, they will start to contemplate taking the business public. Going public means the business will have stock and shareholders. There are a number of reasons why companies go public which is mainly due to the many benefits that come with such a high profile venture. The following outlines the benefits of a business going public: Increase Capital: By going public, a company will able to raise millions in capital. You can increase your business’s capital by selling stock on the open market. By implementing an Initial Public Offering (IPO), one can raise a significant amount of capital such as by selling stock and issuing bonds, for such business activities as increasing revenue, marketing, expanding, eliminating debt, research, business development, and increasing corporate diversity. Public companies have a greater valuation than private companies. Liquidity: With an increase in its liquidity, the value of the public company will be higher because buyers and sellers are more able to engage in market participation. Going public allows a company to create a market for its stock. Liquidity can also provide an investor with more options such as increasing the diversity of their portfolio, makes it easier to buy and sell, and has a more adjustable asset allowance. Mergers and Acquisitions: A publicly traded company can use their stocks as cash when acquiring or merging with other businesses. With the increase in its liquidity, it makes the business more attractive for mergers and acquisition proposals. It will increase the profile of the business and boost consumer confidence making it a good choice for other companies looking for new investment opportunities. Increase Future Profitability and Sustainability: In order for a company to ensure its future as a thriving and financially stable business, it is essential to have access to new and future capital. Because on average an IPO can raise any where from $25 - 50M, going public will allow them to establish capital for the future. As well, they have the ability go back to the market to raise more capital when needed. Once public, the company will be seen as a safer investment risk, which will help in obtaining better financing terms when seeking loans. Attract Top Employees: Because businesses are always competing for the most talented staff, offering stocks and stock options along with salary, gives that business a competitive edge. Providing stock as a reward for high productivity is often more economical than giving out cash bonuses. Improve a Company’s Image: The image of a business is a key part of achieving success. Because public companies have higher profiles than private businesses, it helps with increasing sales, attracting more customers and establishing a loyal customer base, and acquiring long term business contracts. Publicizing the business along with a compelling marketing strategy will significantly help with the growth of the business. Over time the prestige of the company will increase as well as creating brand recognition. A company that does not go public will often have a much more difficult time growing and expanding. A company with big ambitions will normally take their business public to take advantage of all of the opportunities available which will help them to succeed long term. For more information about making an initial public offering, be sure to consult with the professionals. There are many things to consider on how to IPO properly and legally. |
The Process Of Making An IPO In Canada
Wednesday, January 27th, 2010| Scentsy | Flameless Candles | Wickless Candles |
Every business owner wants to see their company develop and thrive for years. Taking your business public, or making an Initial Public Offering (IPO), is an essential step to growing your business. Going public is the process of offering new equity such as stocks, shares, trust units, partnership units, etc. Whatever your reasons for going public, there is a process that must be followed before the company can actually go public. The following is the general process of making an IPO Canada: 1. IPO Preparation: You will be required to have a solid and detailed business plan. It will be helpful when creating the prospectus. A prospectus is a document that gives all of the information that investors require to make an informed investment decision. It will contain such information as financial data and information about the company including its history, future prospects, employee salaries, legal fees, any risks, and other relevant information. It is important to be aware that there will be costs associated with going public. As well, when you prepare the prospectus, you will have to assess pros and cons of going public to determine if it is a worthwhile venture. 2. Develop an Action Plan: Once you have a business plan, you will know what you must have in order to go public. Your financial statements must be in order and current. You must have an expert to advise you on any required management restructuring. You should also have created an IPO advisory group to help with establishing business relationships and marketing strategies. 3. Undergoing Due Diligence: This is when the underwriters and their lawyers perform a methodical examination of all areas of the company. It usually takes about 60 days to complete. The underwriters’ lawyers will ask for any relevant business documents and provide a questionnaire for the company’s directors and officers. There will also be meetings to ask questions. 4. Building a Public Profile: You will have to generate public interest in your company in order to attract investors. You should develop solid business relationships with your advisors to create a professional and credible reputation. Your IPO team of professionals and your chief underwriter will make presentations to the business and investment community. It normally consists of traveling to a number of key cities. During this time, a solid market strategy is essential. 5. Market Pricing: The underwriters will monitor market conditions and experiment with market pricing. As well, the underwriters will normally suggest the final price and offering size. It is important to remember that the biggest cost during a public offering is the underwriters’ fees expenses associated with the offering. The final process of making an IPO Canada is making sure your company appears to be a professional and competently run business. You have to make sure the authority structure is in place and the employees and investors understand the structure. Preparing for an IPO takes a lot of thought, assessment, and planning. By understanding what the process entails, you will have a much smoother private to public transition. For more information about making an IPO Canada, be sure to consult with the professionals. There are many things to consider on IPO How properly and legally. |
Take Your Company Public: How To Go Public Easily 100% of the Time
Sunday, December 6th, 2009| Scentsy | Flameless Candles | Wickless Candles |
There are many ways to use capital without using bank loans, lines of credit and other shady methods like shelf corps and bogus platform scams. If you are truly trying to raise capital for your company here are some simple breakdowns of your options with a quick definition for each one: PIPE: Private Investment In Public Equity this is used primarily by mutual funds and private investment firms where they buy discount stock in order to raise capital, there are two types of PIPEs traditional where common and preferred stock is issued at a set cap to raise money for the issuer and a structured pipe issues convertible debt. DPO: Direct Public Offering is when you sell equity shares directly to customers, suppliers and employees. PPM: Private Placement Memorandum is also known as an offering memorandum takes advantage of Regulation D rule exemptions 504, 505 and 506. This process came into existence with the’33 securities act and popularized in the late’80s, companies can raise money from the public via private placement; there is virtually zero interaction with the SEC after you file form d as long as you stay legal. (most popular form of fund raising). IPO: Initial Public Offering: extremely expensive, need SOX 404 audits, must have board of directors, quarterly financial reports to shareholders, report heavily to the SEC and 1 out of every 1000 companies that want an IPO actually qualify. I love participating in these but most companies just can’t qualify for one reason or the other. OTCBB: Over the Counter Bulletin Board is an electronic quote system that is the next best thing if you can’t go public via ipo, there is minimal red tape to start-ups and small businesses and is legitimized by the stringent ongoing reports to the SEC which keeps investor confidence high (these are extremely solid and I suggest this structure to companies when I am hired by their company or legal team as a consultant as a fast, easy way to raise big capital from the public otc) Pink Sheet: you can look at pink sheets as the Burger King, while the OTCBB is McDonald’s, they are competing otc mechanisms. Pinks sheets are commonly referred to as penny stock and notorious for ‘pump em’ and dump em’ controversies and a lot of crooked people are involved with this platform. This is not a long term process that will allow one’s company to grow, pink sheets companies are typically short lived but it is cheap to set up but not a professional structure that could be upgraded in time to an IPO. Reverse Merger: a group funds the filing and creation of a public shell, they then sell that shell to a company that wants to go public, the established company merges it’s entity into the public shell. The sellers retain around 30% equity after they charge an upfront fee of 300k to 1m. 99% of reverse mergers are successful with the merger, but unsuccessful to bring them to trade and the entity basically just fizzles out. Taking your company public is actually quite simple and inexpensive when you have the right consultant putting the structure together for you. There are countless ways to raise capital quickly and easily. It’s important that you understand your options before you waste time entering into the red tape infested banking system for a loan. Go Public With Your Company, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way! |
Why You Should Take Your Company Public
Thursday, November 26th, 2009| Scentsy | Flameless Candles | Wickless Candles |
There are several reasons why a company would decide to go public; here are some of the advantages. Liquidity is a popular reason for going public via OTCBB or IPO, many global lenders and private equity groups will lend against stock collateral. Private companies lose time jumping through hoops with various FICO driven line of credit and lending programs with outrageous interest rates while a public company can strategically offer stock for sale or collateral. Run a solid company with growth and a sea of content stock holders and you’ve got your own cash register to grow your company. Another popular reason for going public is to offer stock options to key employees which creates and retains loyalty while reducing cost of compensation. There is no better way to have employees go the extra mile day in and day out than rewarding them with a piece of the company. Stock options are also a way to attract those prized executives that are in demand. Having a public company allows massive buying power from the perspective of growth through acquisition. Find a company that is the perfect strategic alliance and buy them with company stock. This method of expansion has served the interests of top tier companies since Standard Oil. What about those companies owned by an individual or a close knit group of entrepreneurs who are getting up there in age and need to start thinking about an exit strategy? Public companies demand higher sale prices and sell faster because of the flexibility of the structure. We could go on and on about the advantages of going public. Start-up companies wishing to investigate this concept of fundraising you may want to consider the OTCBB, this is a solid and regulated formation to trade your stock publicly with stock holder confidence as opposed to a lesser trusted option called Pink Sheets. For corporations with some age and capital and IPO may be the best way to go, though this process is expensive and can take more than a year, it’s worth it for the right Want to Take Your Company Public, then call Princeton Corporate Solutions at 267-233-0183 Go Public via OTCBB, IPO or PPM. We offer Complete Turn-key, affordable solutions. |
Take Your Company Public for the Cash, Get Cash Quicker With Hardcore Publicity
Thursday, November 19th, 2009| Scentsy | Flameless Candles | Wickless Candles |
Why do people attend films or ride heart pounding roller-coasters or watch, with teary eyes, romantic films or comedies? Why do people seek out the temporary release of alcohol or pharmaceutical and illegal barbiturates? People long for the long lost and ancient connection with their emotions. People want to ‘feel’ something, anything and as a publicist it’s our job to play on that emotion to trigger a response. We are trying to activate a reaction from a willing candidate. Man has proven over and over again that they will purchase anything so long as it touches on those emotional pressure points. The public decides to buy cars, houses and cloths all based on emotion. How does the ad or article make you feel when your emotions become tangled with this content? What elements are missing in the target consumer psyche and how can we fill that void while simultaneously branding our client’s product and calling the candidate to action? We toy with the sadness, hopes, fears and aspirations for one important reason, to slowly pull the target market in on behalf of our client so that when they feel sad, hopeless, desperate or in need, our client’s ‘brand’ comes to mind as the automatic answer to all of these issues. Today’s online publicity marketer must have a solid comprehension of the target market’s emotional element, what makes them happy, sad, stressed etc in order to reap the full rewards of a campaign. You must pay attention to the colors, voiceover tone, background music, video clip and image choice, vocabulary and on screen text with webmercials and take into consideration similar aspects when writing articles or creating ads. These components lower the guard of the individual which allows a message to be embedded in the mind. This is done with music, film, political promotions and yes, even ads. At the end of the day, results are what keep the clients coming back and if the advertising ingredients can cradle a sort of post hypnotic cue that calls a client to action, then the needs of the client are being met with branding and sale conversion and the emotional needs of the customer are being taken care of as well. This is one of the few times in life that there is truly a win/win relationship. Looking to find the best deal on Publicity Marketing, then visit www.princetoncorporatesolutions.com to find the best advice on Business Publicity. |
So You Want To Take Your Company Public?
Monday, November 9th, 2009| Scentsy | Flameless Candles | Wickless Candles |
Raising funds has become quite a chore in this depressing economic state so entrepreneurs are thinking outside the box when it comes to obtaining funds for their start-up corporations or businesses in expansion. Institutional lenders are a thing of the past, liberal hedge fund lenders are a mere cast skin of what they once were and with the massive infiltration of scams like shelf corporations and public shells leave the minds of individuals trying to raise funds in perpetual skeptic mode. Though the banks have brought small and medium size business lending to a screeching halt, there are still various turnkey methods that one can facilitate in order to raise the optimal amount of funds needed to pursue their venture. Have you ever considered taking your company public? Don’t be scared off by the nightmare stories of needing millions in financial backing or the critical and ultra costly SOX 404 audits that can make or break your efforts. There are several ways to raise public capital in a cost effective and rapid turnaround process. If you are considering a public offering in the United States, your options are OTCBB, Pink Sheets, Reverse Merger (not recommended), IPO and Private Placement Memorandum. Obviously the IPO is the most sought after method of raising public funds but it is the most expensive and longest route to funding. OTCBB and Pink Sheets are a great way to raise capital without the expense of an IPO but be prepared to battle investor skepticism and ‘pump ‘em and dump ‘em’ securities scrappers who can have you on cloud nine and swimming in a surplus of cash one day and broke as a joke the next. The next method that one will run into on their trek to raise capital is the mysterious reverse merger into a public shell. You’ll hear many entrepreneurs talk about this method but few actually understand the intricacies of this process and sadly don’t realize it’s high failure rate until they are sitting alone at their office at 2 am holding their head in their hands when faced with the reality that 99.9% of reverse mergers into shell companies don’t work and they just threw away $400k. The safest, cheapest and quickest way to raise capital from the public is by way of Regulation D exemption rules 504, 505 and 506. This process is also referred to as a Private Placement Memorandum, Private Placement Memo, Offering Memorandum or PPM. After simply having a professional business plan authored and geared toward raising capital with a PPM, the next step is to see a professional about the Regulation D facilitation. You can pay $20k to an attorney or you can spend around $5k to use a consultant, most companies choose the later. After you’ve had the PPM docs customized, you’re ready to go! Most Private Placement Memorandums only take 2 weeks to put together and file (form d) with the SEC office and then you’re off to the races! PPM’s are becoming more and more popular as informed entrepreneurs are seeking capital but want to hold on to a majority share of their company. If you are trying to raise capital for your small or medium size business or wish to increase your company value exponentially in an expedient manner, start looking into having a Private Placement Memorandum authored for your company. It is absolutely the fastest and easiest way to raise capital for your business without all the expense and red tape of other public fund raising processes. Want to find out more about Taking Your Company Public, then visit Princeton Corporate Solutions’ site or call 267-233-0183. Go Public fast and easy! |