Category Archives: Public capital

Reg A+ IPO

Dennis McCarthy – – (213) 222-8260

Companies should consider using a Reg A+ for their IPO because Reg A+ can be more cost effective and more marketing friendly than traditional offerings which use the Securities Exchange Commission’s (SEC’s) S-1 registration.

The rules permitting the use of Regulation A, now dubbed Reg A+, were revised by the SEC after passage of the JOBS Act which was signed into law a few years ago.  So, Reg A+ is still relatively new.

I’d like to share some highlights about how Boustead uses Reg A+ to enable companies to “go public”.

Reg A+ Shares are Freely Tradable

The first key feature which makes a Reg A+ offering work as an IPO is that shares purchased by investors via a Reg A+ offering statement, once it’s qualified by the SEC, are freely tradeable with no further SEC registration required.

Reg A+ Offering Statement Advantage

The Reg A+ offering statement, called a 1-A, is similar to, but simpler than, the S-1 registration statement which is traditionally used for IPOs.

By simpler, I mean, the 1-A requires only two years of audited financial statements, and the general level of disclosure is more streamlined.

As a result, the 1-A offering statement’s preparation time, attorney’s and accountant’s costs and SEC review time are likely less than for a S-1 registration statement.

For many private companies, saving time and money is critical.

Reg A+ Open to a Wide Range of Investors

Another key feature, the Reg A+ rules permit private companies* to raise capital from a wide range of investors without regard to whether the investor is accredited.

As you may know, in a traditional private placement, private companies are limited to raising capital from accredited investors, who have met threshold income or asset tests.

Even when a private company uses an S-1 registration to go public, it faces practical limits on reaching out to investors.

When using an S-1 registration, a private company typically reaches out only to clients of its offering syndicate and not beyond.  Click here to read more.

Now, in order to efficiently inform this broad range of investors and to help process investors’ offering paperwork, Boustead relies on its affiliated platform, FlashFunders, a SEC registered clearing broker-dealer and transfer agent.

Reg A+ Marketing Permits Use of Various Media

A related benefit of using Reg A+ for an IPO is that a company can reach out to that broad universe of potential investors using many media techniques including email, internet ads, broadcast media, influencers, etc.

Also, a type of pre-marketing of Reg A+ offerings can commence earlier in the SEC registration review timeline which is another advantage of Reg A+ over a traditional S-1 registration.

Boustead believes it has honed its use of media techniques and timing to approach a large universe of potential investors cost effectively.

Key Supporters and Affinity Groups

I should point out that Boustead has found that companies with strong support from current shareholders and large and active affinity groups are more successful with their Reg A+ offerings.

It’s just natural that new investors watch to see whether current investors and customers support the company before jumping in with an investment.

Boustead Teams with Experienced Professionals

Also, in order to have a successful Reg A+ IPO, Boustead works with experienced attorneys, accountants, broker-dealers and consultants. It’s a team effort.

Post IPO Trading on NASDAQ or NYSE

Last but not least, while completing an IPO is an important Company milestone, Boustead considers achieving investor trading liquidity after the IPO to be another key measure of success.

Boustead recommends that a company obtain a conditional listing on NASDAQ or the NYSE to enhance investors’ trading liquidity after the IPO.


So, in conclusion, Boustead’s experience with Reg A+ offerings helps us to advise clients considering using Reg A+ as an alternative to a S-1 registration.

Please contact us to discuss your capital market goals.

* Reg A+ is available to US and Canadian private companies, non-reporting pink sheet companies, and OTC voluntary filers, as well as Canadian listed companies.

Alternative to a Conventional IPO

With the Dow Index at record highs, the valuation differential between public and private companies may be wider now than ever. It’s no wonder that private companies consider “going public” to get a valuation boost.

This surge in initial public offerings (IPOs) has been reported by a number of sources including a recent article, “The Hot IPO Market Continues” by Morrison Foerster in its “Jumpstarter” online magazine.


“The first half of 2014 has seen the hottest IPO market in 14 years – 133 IPOs priced, raising more than $30 billion in proceeds. This is already greater than the total number of IPOs priced during 2011 and 2012. The second quarter even included five IPOs that raised more than $1 billion each.”

Many private companies, however, are too small to go public through a conventional IPO.

Today, a company considering a conventional IPO typically plans to issue at least $100 million of new common stock. Given that the new public stock sold is typically no more than 25% to 30% of the company’s total stock, this requires the company to be at least $250 to $300 million in value before the IPO.

There are many private companies that would like to be publicly traded but haven’t gotten to that size yet for a conventional IPO. These companies might be successful as public companies and gain the benefit of a public company valuation.

For these companies, the alternative of merging with another small public company to “go public” may be a solution.

Many company executives upon hearing of merging to become public immediately think of merging with a shell company. While this is a possible method, I recommend merging with a smaller public “operating” company instead.

There are many smaller public operating companies whose stock price would benefit from a merger in order to add value and upside potential.

Careful selection and evaluation by both sides, the public and the private company, is very important.

The stock market reaction to a well-done merger is positive for both sides in the deal.

My colleagues and I at Monarch Bay have experience with these IPO mergers and can assist your company to navigate the process successfully.

Click here to go to a website page on this topic.


IPOs Using JOBS Act Benefits

L&WHdgUS IPOs are taking advantage of provisions of the JOBS Act, introduced two years ago,

  • to submit a confidential filing, initially, and
  • to “test the waters”.

Latham & Watkins, the law firm, has prepared the attached report to review the use of the JOBS Act provisions during its second year.

Smaller Company Reg A Offering Rules Get Update

LanceImageLance Kimmel, a well-regarded attorney and head of SEC Law Firm, provides us with this helpful summary of key developments that should make Reg A offerings more useful again.

Following the mandate of the Jumpstart Our Business Start-Up (JOBS) Act, on December 18, 2013 the Securities and Exchange Commission proposed rules to amend largely forgotten and little-used Regulation A.

Having received far less attention than either of the other two major equity raising initiatives under the JOBS Act, general solicitation of accredited investors and equity crowdfunding, the revisions to Regulation A may well be the most far-reaching of the JOBS Act reforms. Informally known as “Regulation A+”.

Click here to read more on Capital Market Alerts.

SEC’s Forum on Small Business Capital Formation

SECLogoThe SEC’s annual forum on small business capital formation, which has become an important forum for ideas and discussion, will be held on November 21st.

Thanks to Morrison & Foerster LLP  for the alert.

Click on the link below or copy and paste the link into your browser.

By Dennis McCarthy

Life Science IPOs Surge

Life Science IPOs in May 2013, hit a level not seen for almost a decade.

This is a good sign for essentially all public equity especially public life science companies considering raising equity.

Click here to go to the post on my Medical Business Alerts website.

By Dennis McCarthy