How can I give an IPO? I own a store 5% equity (READ DETAILS)?

Question

I own 5% equity in a store which I an 20 others made a deal for, for 2 million. The person who sold it too us used to make about 220,000 a year and now the STORE still makes about that and we split the profits. Anyway we want money from investors ro GROW and open new ones as the store does well and all you have to do in a corporation is repeat a process that works. So we need money from investors and in turn will try and give them a capitol gain on their investment; Anyway what is the best course of action I figured out some math and if we gave 40% equity to investors we could open another store but that is way too much Is there anything else we can do? WE really want to have an IPO HOW CAN WE DO THAT and if we can't have an IPO now how can we use it later to get money?

Answer 1

An IPO will be remarkably expensive. As a small company, you qualify for all kinds of exceptions to the underwriting rules, but my suspicion is that the annual disclosure costs will smash your profits.

Instead of an IPO with subsequent trading on the pink sheets, I would suggest a venture capital firm. If they believe they can make 30-40% return on investment, it will be attractive. It does not sound like that is the case here.

My best guess is that an SBA or commercial loan would be the way to go. The cost of funds would be lower, the interest would be deductible, you would end up with the company as your own at the end, and it sound like you have plenty of money for debt service.

Otherwise, find a securities law attorney in your state, find out what their due diligence fee will be, if your head doesn't start spinning with the amount of money, then call a major CPA firm to find out what their due diligence fees will be for an IPO. If you have any money left, you will need to find an underwriter in your area. Go to a stock broker first of a big house. If they do this, the company will trade on the pink sheets and you will file a 10-QSB and a 10-KSB each quarter and year respectively.

I am currently a full time doctoral student, but if you are serious and need a little help, you can e-mail me through my profile and I might be able to help you out a little. I would avoid the IPO route myself unless you see an absolutely clear opportunity in front of you. Pink sheets are better than private buyouts later, but stocks on the pinks often trade less than once annually.

Answer 2

You need to hire an underwriter.