Are you looking for a straightforward way to raise money for your business? Are you looking to avoid the restrictions of venture capital financing? A direct public offering may be the best choice for you.
A DPO is one way to make your business more profitable without going through an initial public offering.
You might be wondering: What is a direct public offering? What is an initial public offering? What’s the difference?
Keep reading, and we’ll tell you everything you need to know about the benefits of a direct public offering and how they work.
What Exactly Is a Direct Public Offering?
A direct public offering is when a company sells its securities directly to investors. In a DPO, a company does not have to go through investment banks or other intermediaries.
With a DPO, you get to decide the terms of your offering. You can set your price, minimum investment, how many securities each investor can purchase, and the time window of your offering.
To issue a DPO, you must decide how to market your offering. You must also prepare an offering memorandum with information about your company and how your securities will be sold.
You also must make sure you stay compliant with your state’s laws about financial transactions. You will need to disclose the nature of all transactions and which entities are involved.
To make sure you’re in the clear, look up your state’s Blue Sky Laws.
DPO vs. IPO
The other option for going public with your company is an initial public offering. With an IPO, your offering is underwritten by an investment bank. The bank will also arrange for your shares to be listed on stock markets.
An IPO is significantly more expensive than a DPO. You’ll have more ongoing legal and accounting costs.
With a DPO, you also have less red tape to deal with. You most likely won’t have to register with the Securities and Exchange Commission because you’ll qualify for exemptions.
An IPO may seem more secure because you’ll have the help of professional financial officers. However, you can always hire a consultant to help you with your DPO. You’ll still save money that way.
What Are the Benefits?
A direct public offering can offer many benefits to your business. You’re sure to save money, which is important if your company is relatively new.
The benefits of going public with a DPO include:
- Possibly being exempt from SEC registration
- Increased access to investment funds
- Attracting investment funds from individual and institutional investors
- Ability to offer stock options to employees
- Avoiding the costs that come with an IPO
You can also experience more credibility, more liquidity for early investors, and higher community interest in the business. These are just some of the great things that a DPO can offer your business.
Go Public With a DPO
Now is the time to raise investment capital for your business. Get started today!
Since you now know all about the benefits of a direct public offering, consider talking to a financial consultant to find out if a DPO could be right for you.