How to Get the Best Deal

By Dennis McCarthy – (213) 222-8260 –

Welcome to the equity series – raising equity for small cap public companies

This particular video addresses how to get the best deal.

OK, let’s say your company’s strategic plan calls for acquisitions or substantial capital expenditures, requiring more capital than your company can generate in current cash flow and borrowings.

Once you determine that you’re likely to need to raise some equity, you should begin to prepare right away.

Planning ahead is key to get the best deal.

Planning ahead suggests that your company should file what’s called a shelf registration statement with the SEC because that will enable your company to sell stock promptly when your stock price is attractive and investors are most interested.

I’ll cover the topic of shelf registration in more detail in another video.

Planning ahead also suggests that you raise equity before you absolutely need it.  Your company will get the best deal if your company has the leverage to cancel or postpone a deal if the stock price moves unfavorably before pricing.

If your back is up against the wall and your company absolutely needs to raise equity, Wall Street may take advantage of the situation.

OK, OK, I know you’re thinking “that’s shocking, Wall Street wouldn’t do that”, but it would.  So don’t get your company in a situation where Wall Street can take advantage of you.

Also, by planning ahead, your company may be able to make its offering more appealing to investors by increasing the offering size by including some shares from selling shareholders. 

It’s important to note that today it’s OK for a company to hold cash.  Recently, I reviewed a report listing industry stats.  I was reminded, frankly surprised, by how much cash companies hold.

So, the answer to the question how to get the best deal is to plan ahead, be opportunistic, keep the leverage to defer, if necessary.

In subsequent videos, I’ll go into detail on offering mechanics where I’ll have more suggestions for you.

Please contact me to help your company to raise equity or any other capital market project.