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Many people looking to go public think that they will automatically be able to raise money because they read all over the internet and elsewhere that going public allows their company to access the U.S. capital markets. This is only half of the truth. Having access to capital markets does not mean that your company will actually be able to raise capital after going public.

You see it all over. "Take your company public. Go public because it will allow you to access the capital markets." What you don't hear is the rest of the story: Your company must have the fundamentals necessary not just to access but to actually raise the capital you want after you go public.

Having access to something is not the same as actually being able to get the thing to which you have access. Having access to the capital markets is not the same as being able raise the capital to which you have access.

If your company lacks the necessary fundamentals that real, serious-money investors are looking for, you won't raise a dime from someone you don't know. And you certainly won't get a broker/dealer to raise money from you either.

What are these serious- money investors or broker/dealers looking for? Four fundamentals:

* One - Good Experienced Management

* Two - A Proven Business Plan

* Three - A History of Revenues and Profits: A company with more than $10 million in annual revenues and $2 million in annual profits

* Four - The Ability to Grow Your Business with Additional Capital: The ability to double revenues and profits year-over-year using the capital raised for you

You'll hear the same argument about a reverse IPO, sometimes called reverse merger, with a public shell. But whether you go public directly or through a reverse IPO, sometimes called reverse merger, with a public shell, if you lack these fundamentals, no matter what you are told by someone else, I'm telling you the truth: You will not raise any money from serious-money investors or broker/dealers unless your company has all of the fundamentals set forth above.

Still, I continue to be amazed that many entrepreneurs and companies think that by going public money will magically rain down upon them from the sky. That's what I call "Field of Dreams" thinking. If you build it, they will come. If I go public, I will automatically be able to raise money.

However, a Go Public Direct transaction can help you raise money if you go public if you already know investors yourself, on your own, who will invest in your company if you have the credibility and transparency of being an SEC reporting company and if they have a market into which to sell their stock.

Before you get involved in any going public transaction, whether a Reverse IPO reverse merger with a public shell or a self-underwriting, to raise money, get advice from an experienced SEC lawyer who knows the ins and outs of the entire process and can take a private company public directly in a Go Public Direct transaction without a Reverse IPO reverse merger with a public shell, but only if it allows the company to meet its objectives in going public.

This article, which does not constitute legal advice, was written for information purposes only by Michael T. Williams, Esq., an experienced SEC attorney of the Williams Securities Law Firm, P.A., Tampa FL, whose practice is primarily focused on taking companies public.

By Michael T W
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