IPO services

U.S. IPO Advisory

The U.S. capital market is the largest in the world (the U.S. stock market is about 43% of the world stock market). Throughout its long history as world’s financial capital, the U.S. capital market has developed the most matured structure of regulatory system and designed multi-tier market for all types of companies. The United States is the location for the two largest exchanges in the world. The New York Stock Exchange lists 2,400 companies. They’re worth around $21 trillion in market capitalization. That’s the value of all its shares. The NYSE is located on Wall Street. The Nasdaq has 3,800 companies with a market cap of $11 trillion. It’s located in Times Square. Both are in Manhattan, New York. in addition, there is also an over-the-counter market, OTC with less stringent requirements for companies to go public. Different markets provide financing services for enterprises with different scales. As long as the company meets the listing requirements of one of the markets, it can apply with SEC to raise funds through an IPO. Whether it is a large Chinese company or a small or medium-sized private enterprise, they are all suitable to go public in the United States. Because of the diversification of the U.S. capital market and the variety of listing methods, different companies are provided with different services, enabling enterprises at all levels to enter the U.S. capital market.

To save you time and cost, and reduce uncertainties, our professionals will offer the assessment review prior to listings. Through a series of interviews, we will assess whether the companies meet the listing requirements and establish an IPO readiness report to best close the gap.

Our diagnostic approach will evaluate based on multilevel aspects, including the companies’ current statuses and future prospects, funding requirements, and current organizational and leadership structures. Through these internal factors, we identify the critical efforts and how to prioritize to meet the requirement. We also look at market and industry trend, as well as political and economic climate, to weigh the pros and cons and evaluate the right timing and path to IPO.

Below are the key areas to be focused on during IPO readiness review:

financial information and planning- Past 3 years historical financial track record, plus assessment efforts to make financial reporting form with U.S. GAAP standard.

Corporate Governance- board composition and committee structures and changes needed to meet public company requirements.

Company structure- Consideration as to which entity is listed and if VIE is required for company restructuring for U.S. IPO. Impact on transaction structuring including: tax planning, structure of financing arrangements, distributable reserves, and share incentive considerations.

#1

Pre-IPO Planning & Assessment

Assembling the IPO team
Identify IPO strategy and timeline
Conduct company restructuring
Streamline financial reporting and set up corporate governance

#2

IPO Preparation Period

Perform financial audits
Distribute RFP and select Underwriters
Complete due diligence
Draft and submit registration statement S1/F1 with the SEC
One-on-one and group roadshow meetings

#3

Post Effective Period

Price and close transaction
Start trading and perform post-IPO management

What is SPAC?

A special purpose acquisition company (SPAC) is a corporation formed for the sole purpose of raising investment capital through an initial public offering (IPO). Such a business structure allows investors to contribute money towards a fund, which is then used to acquire one or more unspecified businesses to be identified after the IPO. When the SPAC raises the required funds through an IPO, the money is held in a trust until a predetermined period elapses or the acquisition is made. In the event that the planned acquisition is not made or legal formalities are still pending, the SPAC is required to return the funds to the investors, after deducting bank and broker fees.

How to IPO through SPAC?

In this case, the private company is the target rather than the acquirer. Therefore, its shares are acquired by the SPAC along with control of operations. In an all-cash deal, which is most likely since the SPAC has already raised capital for the acquisition, the private business owner will receive liquidity without further interest in the new entity.
This can be an attractive option for those who are interested in exiting their business. Typically, initial shareholders can realize greater returns through SPAC acquisitions than through a traditional IPO – a great alternative for those who don’t think their business is strong enough to pull of an IPO. And for those who want an exit but also want to make sure the future of the new company is secure, it is assuring to know that SPACs come with significant capital and an experienced management team. They typically raise more money than reverse mergers at the time of their IPO – an average of $75M compared to $5.24M raised in secondary offerings after reverse mergers. Plus, in contrast to private equity firms, SPACs are usually more transparent since they are regulated by SEC rules.

American Depositary Receipts (ADRs) are stocks that trade in the U.S. but represent a specified number of shares in a foreign corporation – such as Alibaba (BABA). Like regular stocks, ADRs are bought and sold on U.S. markets. They also trade in U.S. dollars and clear through U.S. settlement systems – allowing ADR investors to avoid transacting in a foreign currency.
The DR is created when a foreign company wishes to list its already publicly traded shares or debt securities on a foreign stock exchange. Before it can be listed to a particular stock exchange, the company in question will first have to meet certain requirements put forth by the exchange. Initial public offerings (IPOs), however, can also issue a DR. DRs can be traded publicly or over-the-counter (OTC).