Investment & Financial Articles
Title: List Your Company in the States
Author: William Cate
Article:
List Your Company in the States By William Cate Published March
2000 [http://home.earthlink.net/~beowulfinvestments/]
[http://home.earthlink.net/~beowulfinvestments/globalvillageinves
tmentclubwelcome/]
The alternative to listing your shares on the OTCBB is to list
them on the NYSE, AMEX NASDAQ or a Regional American Stock
Exchange. The Target Company balance sheet and time argue
against using the New York Stock Exchange (NYSE). Target
Companies could meet the American Stock Exchange (AMEX) listing
requirements with their first acquisition. AMEX has an
institutional investor following that NASDAQ lacks. AMEX is
owned, but not operated by the NASD. It's a better choice than
NASDAQ. I believe that NASDAQ has the structural problems of the
OTCBB/BBX. While I'm willing to work with a Target Company
desiring to list on NASDAQ, I strongly advise against it.
The Regional Stock Exchanges include the Boston Stock Exchange,
the Chicago Stock Exchange (formerly the Midwest Stock
Exchange), the Philadelphia Stock Exchange, the Cincinnati Stock
Exchange and the Pacific Stock Exchange. The NASD owns, but does
not operate the Phila-delphia Stock Exchange. These five Stock
Exchanges are aggressively seeking listings. You can list of any
of them for about US$350,000. As with your Target Company SEC
registration, the primary costs involve your American attorney's
legal fees. I suspect the BBX will help these four stock
exchanges expand the number of listed companies.
The greatest cost in going public is the cost of maintaining
your share price. Unlike most sales, the original seller is
responsible for finding all the later buyers of their shares.
It's this cost that destroys public companies.
"Follow the Swiss Currency Formula" is the first axiom of a
strong share price. Don't issue shares unless you receive
cash-producing assets as benefits. Issuing stock to employees is
a terrible policy. If your employees want to buy your stock, let
them do so from their stock broker. Paying bills with your stock
always costs your Target Company a multiple of the face value of
the bill. Your creditor sells your stock and you become
obligated to find all the buyers for those shares for the next
several years. The cost of finding those buyers exceeds the face
value of the bill. At best, the practice defers the bill payment
for a year or two.
It costs less to keep your present shareholders than to find new
investors to buy your stock. Your investor relations should
focus upon keeping your existing shareholders. If you attract
shareholders based upon an implied promise that your shares will
appreciate in value, those shareholders will sell into that
share price appreciation. Your shareholders must share your
Target Company vision. You must offer them reasons for keeping
their stock. For years, I've favored non-cash benefit program
for shareholders. Secure discounts and deals on items and
services the average small capital investor needs. This can
range from fleet buying of cars to cruise ship discounts. Try to
ensure that the non-cash discounts equal the value of your
shares to the average shareholder every year. If you do so, very
few of your shares will enter the Market.
Remember that stocks are sold, they aren't purchased. This means
that you have to find and pay people to sell your stock. There
can be no assurance that the Investor Relations staff you
contract to use can sell your stock to anyone. Over a decade
ago, an extremely successful American Investor Relations firm
attempted to promote their stock. Their effort failed, badly.
Almost nobody purchased their shares. They used techniques that
had worked for their clients. If an Investor Relations firm
can't be certain to create buying for themselves, you can't be
certain they can create buying for you. Even if they can't sell
your shares, you will pay dearly for their efforts.
As with many things in the Financial Industry, Investor
Relations costs are often set by the ignorance of the buyer. Be
certain that you aren't being charged far more than the
marketing service costs other public companies. Define your
target market for shareholders as long term investors. If you
attract the small capital speculators that populate the OTCBB
Market, they will sell into any share price appreciation. Why
have them sell your shares at a high price to long term
investors? Let the shareholder who will support your company
profit most from your Target Company vision.
Small Capital Investors buy shares motivated by greed. However,
that greed must have a credibility component with it. The best
credibility component is the investor's ability to buy the
Target Company's product or service in their local area. A
company selling something they can buy is credible.
I believe that American Small Capital Investors make unlikely
long term investors. I think the Investor Relations techniques
used in the United States are not as effective with American
investors as they would be else-where. The reason is that the
American public is over exposed to effective marketing
techniques. In most of the World, the local population distrusts
the local currency. They tend to unwisely trust the American
Dollar. This viewpoint is a major reason that the GRCM works
outside the United States. Owners of cash-producing assets want
payment in American Dollars, not the local, restricted currency.
The principle applies to potential long term shareholders in
these countries. It would simply be a variant of the Five Step
Path tactic. For these reasons, I'd advise Target Companies to
target their Investor Relations efforts within their own region.
They are credible to investors because their product or service
can be found locally. They are more likely to respond to an
Investor Relations appeal. They may want to hold their assets in
American Dollar denomi-nated securities. It costs less to run an
Investor Relations program outside the United States. The
Internet gives all investors and shareholders adequate access to
relevant stock information.
It costs money to be able to print your own money. The costs are
worth it, if you use your shares to build your company. The
potential leverage will compress the development of your into an
acquisition target to a few years. It will leverage your
company's value because your Target Company will be valued in
American Dollars at Market Capitalization (Share Prices times
issued shares).
To contact the author: Visit the Beowulf Investments website:
[http://home.earthlink.net/~beowulfinvestments/] Or, visit the
Global Village Investment Club Website:
[http://home.earthlink.net/~beowulfinvestments/globalvillageinves
tmentclubwelcome/]
About the author:
He has been the Managing Director of Beowulf Investments
[http://home.earthlink.net/~beowulfinvestments/] since 1981 and
is the Executive Director of the Global Village Investment Club
[http://home.earthlink.net/~beowulfinvestments/globalvillageinves
tmentclubwelcome/]
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