Ok so your company is growing and to keep that growth perpetuating you need capital. You're a solid business; you have nice profits, hey, why not take your company public? Just get a structuring consultant, PCAOB auditor, line up your post public investor relations and don't forget to find a good S1 filing attorney that can get back to the SEC during the comments phase and get you to FINRA for a trading symbol ASAP.
You meet with the attorney; she's a sweet little old lady in her late 50's. She tells you how great it is to work with you and she loves your company. You decide her office is too far for your first face to face meeting so you meet her at a slurpy shop. She gets a large orange tasty freeze, you get pineapple and she grabs the bill and there you sit, slurping away as you chat about how your company is about to go big time. First you'll conquer the OTCBB, then the NASDAQ blah, blah, blah.
You get to the awkward part of the conversation where you start to discuss fees. She tells you she loves your deal so much that she'll do it in exchange for straight up equity, 3% of the company and she'll even throw in 10k and 10q filings and general contract review for one year after you go public at no additional fee. After all, your company is worth $10 million, you've spent 9 years building the company; it seems she appreciates that and you grab the contract and feverishly sign and initial all pages. You slap the pen down, take one last gulp of the, now melted, pineapple tasty freeze and you slap hands, heck you run around the slurpy shop throwing high fives at anyone willing to get into the madness.
You drive home with dollar signs in your eyes and a week later you get the 'real' contract, you realize that what you signed in the slurpy shack was just a letter of intent and this paperwork has numbers that you never discussed such as '10% equity', '$10,000 PPM Fee', 'DPO', '100% Restricted Shares'. You think there is a mistake so you reach for the phone to call this sweetheart lawyer who bought you that luscious slurpy to remind her of your conversation about 3% equity, no upfront fees, IPO and Free Trading Shares. You dial the number on her business card "beep, beep, beep" ah nuts you called the fax number. you dial again and this time you get through, she picks right up and says in a sweet voice, "oh how are you? I was just talking about you to my neighbor with Alzheimer's and a lazy eye from her recent hip replacement surgery which was supposed to be a consultation for an eye exam so she could get contact lenses...".
You tell her that you got her invoice and there must be some mistake, "oh no mistake sweetheart, those are my fees" she says. "But you told me something completely different at the Slurpy Shack! You told me that I only had to give up 3% of my company to your firm and that there were no additional fees because of the revenues from my company and that we would do an IPO instead of a DPO because I needed capital to run my business post public".
"Oh I'm sorry", she says, "those are my fees, your deal will take a little more work than I thought". You look at the phone and hang it up. You're dreams are shattered, you just paid off a big line of credit so you don't have the $10k and you can't give her 10% instead of 3% that just doesn't make sense and why in the heck would you do a DPO when you need the capital in the public markets to fund your business in a way that only an IPO can? This attorney just doesn't get it. Instead of giving you what you need, she's giving you what her limited technical capabilities enable her to give. She doesn't even know how to do an IPO, only DPO's and she needs the 10K upfront because she's not even writing the PPM, she's outsourcing that. She lied, she misled you but hey, all is fare in love and S1 filings.
Congratulations! You've just been through 'S1 Attorney 101'. Believe none of what you hear and half of what you see and when you get a great deal with from an S1 filing lawyer, pinch yourself because you're only dreaming.
You meet with the attorney; she's a sweet little old lady in her late 50's. She tells you how great it is to work with you and she loves your company. You decide her office is too far for your first face to face meeting so you meet her at a slurpy shop. She gets a large orange tasty freeze, you get pineapple and she grabs the bill and there you sit, slurping away as you chat about how your company is about to go big time. First you'll conquer the OTCBB, then the NASDAQ blah, blah, blah.
You get to the awkward part of the conversation where you start to discuss fees. She tells you she loves your deal so much that she'll do it in exchange for straight up equity, 3% of the company and she'll even throw in 10k and 10q filings and general contract review for one year after you go public at no additional fee. After all, your company is worth $10 million, you've spent 9 years building the company; it seems she appreciates that and you grab the contract and feverishly sign and initial all pages. You slap the pen down, take one last gulp of the, now melted, pineapple tasty freeze and you slap hands, heck you run around the slurpy shop throwing high fives at anyone willing to get into the madness.
You drive home with dollar signs in your eyes and a week later you get the 'real' contract, you realize that what you signed in the slurpy shack was just a letter of intent and this paperwork has numbers that you never discussed such as '10% equity', '$10,000 PPM Fee', 'DPO', '100% Restricted Shares'. You think there is a mistake so you reach for the phone to call this sweetheart lawyer who bought you that luscious slurpy to remind her of your conversation about 3% equity, no upfront fees, IPO and Free Trading Shares. You dial the number on her business card "beep, beep, beep" ah nuts you called the fax number. you dial again and this time you get through, she picks right up and says in a sweet voice, "oh how are you? I was just talking about you to my neighbor with Alzheimer's and a lazy eye from her recent hip replacement surgery which was supposed to be a consultation for an eye exam so she could get contact lenses...".
You tell her that you got her invoice and there must be some mistake, "oh no mistake sweetheart, those are my fees" she says. "But you told me something completely different at the Slurpy Shack! You told me that I only had to give up 3% of my company to your firm and that there were no additional fees because of the revenues from my company and that we would do an IPO instead of a DPO because I needed capital to run my business post public".
"Oh I'm sorry", she says, "those are my fees, your deal will take a little more work than I thought". You look at the phone and hang it up. You're dreams are shattered, you just paid off a big line of credit so you don't have the $10k and you can't give her 10% instead of 3% that just doesn't make sense and why in the heck would you do a DPO when you need the capital in the public markets to fund your business in a way that only an IPO can? This attorney just doesn't get it. Instead of giving you what you need, she's giving you what her limited technical capabilities enable her to give. She doesn't even know how to do an IPO, only DPO's and she needs the 10K upfront because she's not even writing the PPM, she's outsourcing that. She lied, she misled you but hey, all is fare in love and S1 filings.
Congratulations! You've just been through 'S1 Attorney 101'. Believe none of what you hear and half of what you see and when you get a great deal with from an S1 filing lawyer, pinch yourself because you're only dreaming.
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