Leveling the IPO Playing Field

Leveling the IPO Playing Field


The Securities and Exchange Commission (SEC) is considering permitting private companies of all sizes to confidentially “test the waters” with potential investors before embarking on the initial public offering (IPO) process, according to The Wall Street Journal (link).

This is not a surprise given the other signs that the SEC appears to be trying to level the procedural playing field among companies using different forms of registration.

For example, the SEC announced last June that it permits companies of all sizes to use confidential filing, not just those companies which are subject to the new JOBS Act rules (Click to read article).

Boustead has found, in conversations with the SEC about specific offerings, that the SEC is attuned to the advantages afforded companies using the new forms of registration.

“While the rules are still the rules, we’ve seen an effort by the SEC to work with our clients to reduce some of the differences between forms of SEC registration, where possible.” said Keith Moore, CEO and Founder of Boustead Securities, LLC. a broker-dealer working with clients using Reg A+ and traditional forms of SEC registration.

Given this trend, the rules currently available to companies using the new JOBS Act rules, such as Regulation A, dubbed Reg A+, may eventually be afforded to companies using other forms of SEC registration.

Until then, a private company contemplating an IPO should at least consider using Reg A+ among its options.

For more on Boustead’s experience using Reg A+ for IPOs, click here.

5 Common Website Mistakes of Microcap Public Companies

Adam Epstein, a former microcap institutional investor, shares his list of common failings of microcap public company websites.  In his experience, these failings dissuade investors, a costly problem.

Adam is a frequent speaker at microcap conferences.  This webinar is well-organized and well worth the few minutes investment by company executives and service providers.

Click here to go to the webinar page.

SEC Charges IR Exec. With Selective Disclosure

As a timely reminder to those of us who work with public companies, the SEC just charged an investor relations person at a public company with selective disclosure of what was material non-public information.

Those of us who’ve worked with public companies for many years recall the outrageous abuses which prompted Reg FD in order to promote full and fair disclosure of material financial information.

Even after Reg FD, however, occasionally company executives forget or get sloppy about following the disclosure rules strictly.

This case, then, is a valuable reminder to us all.  Please click here to take you to the article by Holland & Knight which describes the circumstances of the case.

Post by Dennis McCarthy

Affordable Care Act – Helpful Webinar

The Affordable Care Act is a complicated law which will impact most companies and employees.

While this is not a direct capital market issue, the cost and confusion created, will likely have an impact on US employment, a critical problem.

This webinar includes an helpful overview by E&Y, the accounting and consulting firm, plus a review of the practical impact on Ranstad, the staffing firm.

The link to the webinar is below.  You can click on it or copy and paste it into your browser.


Raising Equity for Small Cap Public Companies Series

Dennis McCarthy – (213) 222-8260 – dennis@monarchbayassociates.com

See “Equity Series” above on navigation bar.

Today, Wall Street investors are receptive to buying public company stock, even IPOs, initial public offerings, which is a sure sign of investor appetite. 

So, in this receptive Wall Street environment, many small cap public companies are considering raising equity capital.

Now, small cap public companies have many more options for the mechanics of raising equity.  That’s a good thing but requires company management to make some choices, preferably good choices.

To help companies to better understand what options are available as well as some of the tricks and traps, I created a series of videos on raising equity for small cap public companies.

In this equity series, I’ll address topics including:

  • How to get the best deal.
  • What are key regulatory rules.
  • What are the available mechanisms for raising equity and
  • What are the pro’s and con’s of each mechanism.

Each of my videos will be short and focused on one element of the topic.

I plan to supplement my videos with contributions from other professionals who will add their special expertise to the series.

I hope you’ll enjoy this series.  Give me your feedback to make it even better.


Flood of Corporate Bonds

Dennis McCarthy – (213) 222-8260 – dennis@monarchbayassociates.com

Right now, corporations are raising capital in record amounts by selling high grade bonds.

Can you blame them?  High grade corporate bonds are priced today at record low interest rates.

Even at these record low yields, investors are buying corporate high grade bonds in large volumes.

Investors are seeking interest rates that offer positive yields over inflation. 

The traditional source of yield for many investors, US Treasuries, seems no longer attractive.

 So, what’s the take-away here. 

You should at least consider raising capital through issuing corporate bonds if your company could rationally raise debt of roughly $100 million or more.

Contact me to discuss raising debt to capture this opportunity, or any capital market topic. 



2012 Proxy Season – Initial Results

Dennis McCarthy – (213) 222-8260 – dennis@monarchbayassociates.com

Webinar Linkhttp://www.equilar.com/webinar/2012-proxy-trends/archive.html

My recent post, entitled “Herding Cats” described proxy advisors as a powerful new voice for investors especially at proxy season.

Today’s post offers an initial recap of the 2012 proxy season:

what were the key issues on which proxy advisors played a role;

what were the companies’ responses; and  

what were the vote results?

Latham & Watkins, a law firm, and Equilar, executive compensation consultants, produced a valuable webinar covering these topics. The link is below.

The key issue this proxy season was “pay for performance”. 

Executive compensation, in general, is likely to be a hot button issue for several years so I recommend listening to the Latham and Equilar webinar.

Please subscribe to my blog to stay informed of these and other capital markets developments. 

Please call me to help your company to raise equity or debt or to complete M&A projects. Thank you. 

Shareholder Vote

Shareholder Vote

DirectMarkets Update

Dennis McCarthy – (213) 222-8260 – dennis@monarchbayassociates.com

I had a chance to speak with Kevin Lupowitz, head of the Direct Markets unit of Rodman & Renshaw about  the planned launch of the service.

DirectMarkets is an online system to permit public companies to sell shares to investors in a manner that bypasses much of the current Wall Street process.

Regarding the launch, Kevin indicated that investors were currently signing up to become bidders.  Presumably, many of Rodman’s current deal investors would form the initial investor pool.

We might see the first deal processed through the DirectMarkets platform within the next couple weeks.

I asked Kevin a question that has been nagging me, don’t many small and microcap companies need the assistance of bankers and salesmen to get offerings done.

Bankers to advise the company on market conditions and prepare marketing materials.  Salesmen to alert investors to the deal.  Together, the two intermediate the deal terms if needed.

Kevin admitted that the system might benefit from human intervention, at least initially.

He cited his experience at Liquidnet, an automated block trading system, however, to indicate that he’s seen investors get comfortable with automated systems.

I know we’ll all be watching this launch with great interest.  If DirectMarkets succeeds, it’s bound to have a major impact on the small cap market on Wall Street.  But more on that next time.

The JOBS Act – Update

Dennis McCarthy – (213) 222-8260 – dennis@monarchbayassociates.com

The new JOBS Act, intended to make it easier for smaller companies to raise capital, was signed into law by the President on April 5th.

First, let me say that I welcome the reduction in the regulatory burden on smaller companies.  I hope this spirit of deregulation will be extended to existing small cap public companies which continue to operate under the old burdens.

However, some needed changes to encourage capital formation by smaller companies aren’t as easily handled through legislation.  For example, thin liquidity in many small cap stocks has several causes and would require several fixes.  Lack of liquidity, therefore, will likely continue to plague smaller cap stocks.

Also, we can’t legislate good judgment.  Even under the former, so-called stricter rules, investors shoveled money into Chinese stocks, many of which proved to be unwise investments.  The new JOBS Act places even greater responsibility on investors to exert good judgment.

Experience tells me that companies considering raising capital should take advantage of these relaxed rules as soon as possible before some visible blow-ups or disasters trigger re-tightening of the rules.

The following links provide helpful summaries and analyses of the JOBS Act.  Thank you.

Sheppard Mullin: http://www.corporatesecuritieslawblog.com/capital-markets-president-obama-signs-jobs-act-landmark-reform-for-small-and-emerging-growth-companies-now-law.html

TroyGould: http://troygould.com/index.cfm?fuseaction=content.contentDetail&ID=9187&tID=303

Latham & Watkins:http://w.on24.com/r.htm?e=445288&s=1&k=17FD77D843F6EAE8A36641AD5AE93257