Process
An APO is a quick transaction compared to an initial public offering (IPO). At the closing of an APO, the public shell and private company sign merger documents to complete the reverse merger; file a Super 8K with the Securities and Exchange Commission (SEC), which is the required public disclosure of transaction; file a registration statement with the SEC to register the PIPE shares; release PIPE funds from escrow; and issue a press release announcing the completion of the transaction. The company’s stock now begins trading on the OTCBB, reflecting the new valuation.
A company can close an APO in as little as 30 – 45 days. After the close of an APO, the company is funded and has exactly the same SEC disclosure requirements as an IPO. Approximately 3 to 4 months after the completion of the APO, the company’s registration statement should clear comments and “go effective” with the SEC. When this is accomplished the company can then submit its application to obtain a listing on NASDAQ, AMEX, or NYSE. Listing approval for the exchanges typically takes about one month. At this point analyst research coverage begins and the company focuses on IR efforts, non-deal roadshow, conferences etc.
At the conclusion of a successful APO transaction, a company has received equity funding and has a base of institutional investors. The company has the sponsorship of an investment bank and is exchange listed with analyst coverage. There is now a true market value for the company and the company is positioned to raise additional capital in PIPE transactions.
Read more about this topic: Alternative Public Offering
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