An Innovative Way To Raise Capital Before Ipo

An Innovative Way To Raise Capital Before Ipo

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Many institutional investors only invest into listed companies. What are the options available to private companies?

If your company is a private company with a capital funding requirement then here are two innovative solutions:

One is what is called a "pass through" facility which is the subject of another white paper you can request from me.

The other is what we call a "Pre Listing Commitment" which is a legally binding agreement with the fund to give you the cash you need once you are listed.

What is the benefit of a Pre Listing Commitment? The benefit to you is that this allows you to leverage this into an IPO/RTO or merger with a listed company.

The reason this gives you leverage is that the listed company you merge with knows that you are bringing both the asset of your company and the money to fulfil your business plan to the deal and you are sure to get the cash you need once the deal is completed.

This also empowers you to raise any bridge financing you may need in the interim because the pre ipo investors know you will have the money to complete your business plan.

Plus the investors may have incentive because they may never again be able to invest into your company this cheaply.

Think of it like this, a pre listing commitment is like a check that you need to find a public company to cash for you.

Here is the mechanics of the solution?

- You make an application to a fund for a Pre Listing Commitment.

- The fund gives you the terms they would invest in your company if you were already public.

- You sign the Pre Listing Term Sheet.

- Legal counsel makes the subscription agreement.

- You and the fund sign the formal documents.

- You now have a legally binding agreement for the funds you need post listing/merger/rto/ipo.

- This legally binding agreement is transferable to a listed entity.

- You find the listed company.

- You a deal with a listed company to merge with you.

You are now guaranteed to get the cash for success. Your potential investors also know that once you are listed you will be able to provide them with a liquid exit.

One very smart thing to do would be to research which listed companies are in your field who have excellent liquidity but no cash.

About the Author:
Alvin Donovan, Institutional investor partner substantial funds, bestselling author, hedge fund industry pioneer, completed several billion dollars transactions, consultant to fortune 500 companies, faculty member most of the world's largest management institutes, raised over USD$1.5 billion for funds

http://www.alvindonovan.com



Article Originally Published On: http://www.articlesnatch.com


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