Going public provides many benefits for companies if done properly. The U.S. markets remain the most appealing for going public transactions. While going public has many benefits, it can be a trap for the inexperienced.

1. EVERYTHING YOU WANTED TO KNOW ABOUT GOING PUBLIC BUT
WERE AFRAID TO ASK
GOING PUBLIC 101 Q&A

2. WHAT DOES IT MEAN TO GO PUBLIC ?
• Going public often refers to the process of a company
filing a registration statement with the Securities & Exchange
Commission to register its securities and become a
reporting company. This process is referred to as “going
public” even if the Company does not have a stock ticker
symbol and its shares do not trade.
• Going public may also refer to the filing a Form 211 with
FINRA to obtain a ticker symbol for quotation on the
OTC Markets without filing a registration statement with the
Securities & Exchange Commission.

3. WHY DO MOST COMPANIES GO PUBLIC?
• Most companies go public to raise capital. It is much
easier for a public company to locate capital than it is
for a private company.
• Funds raised in going public transactions can be used
for working capital, research and development, retiring
existing indebtedness, acquiring other companies or
businesses or paying suppliers.

4. BENEFITS OF GOING PUBLIC
• Once a going public transaction is complete, a company can
use its common stock as currency & collateral for loans.
• Going public creates value for a company’s shares & creates
liquidity for existing and future investors.
• Going Public provides an exit strategy for shareholders and/or
investors.
• Public company stockholders may be able to sell their shares
or use them as collateral.
• Public companies have greater visibility than private
companies and are often featured by the media.
• Going public allows a private company to attract more
qualified employees and key personnel.
• A certain amount of prestige is associated with public
company status or service to a public company.

5. WHAT IS A REVERSE MERGER?
• A reverse merger is a transaction in which a private
company merges into or is acquired by an existing
public company.
• After a reverse merger is complete, the business and
management of the privately held company becomes
that of the public entity.
IS A REVERSE MERGER REQUIRED TO GO PUBLIC?
No. Companies can go public using a direct public
offering even when they do not have an underwriter for
their offering. A reverse merger is not required.

6. WHAT IS A DIRECT PUBLIC OFFERING?
• Unlike an initial public offering or IPO, direct public offering
is an offering conducted by a company on its own behalf
without an underwriter.
• Direct public offerings are often used in conjunction with
going public transactions.
• In a registered direct public offering, the company files a
registration statement with the Securities & Exchange
Commission to register shares on its own behalf or on behalf
of its selling stockholders.

7. WHAT IS DTC ELIGIBILITY?
• DTC is the only custodian of securities for its participants,
which include broker-dealers.
• DTC is the only securities settlement provider in the U.S. If
an issuer’s stock is DTC eligible, DTC will hold an inventory
of free trading shares in street on deposit. These free-
trading shares are also known as the “public float”.
• Without DTC eligibility, shares can only be publicly
traded if there is physical delivery of a stock certificate
and payment between a buyer and a seller.
• Without DTC eligibility, it is almost impossible for a public
company to establish an active trading market in its
securities.

8. WHAT ARE THE DISTINCTIONS BETWEEN A SECURITIES
ACT & EXCHANGE ACT REGISTRATION STATEMENT?
• Filing a registration statement under the Securities Act of
1933 , such as on Form S-1 registers an offering of
securities. Shares registered under the Securities Act,
generally are not restricted securities.
• Filing a registration statement under the Securities
Exchange Act registers a class of securities such as
common stock.
• Registration under the Exchange Act does not register a
securities offering and it does not create unrestricted
securities.