Do you want to significantly increase your company value?
 
 

“MBNE can help insulate you and your company from the challenges of being a public stock company through our Special Partnering Program. Dr Morris has more than 20 years experience handling the reporting and compliance details of being a public company”.

Almost all owners/managers and investors want to significantly increase the value of their companies as a primary goal. And all involved realize that greater revenue and income define a successful company. However, one of the greatest value increases in company value comes from taking a private company public or by properly managing a public stock company.

And to realize and enjoy the wealth of owning stock, generally the investor needs to sell some shares and/or borrow by using the shares as collateral. In either case, it is generally necessary for the stock to be public and trading. Therefore, helping to create liquidity for a partner is primary goal of MBDE

Although your specific financial goals will help to determine exactly how we accomplish our assignment in helping you increase the value of your company, there are certain standard decisions and activities we can identify.

One of the first decisions is to determine your readiness to become a public stock company. Becoming a public stock company can be overwhelming and anxiety producing if that is not what you do professionally.
Dr George Morris, the president of MBDE has worked done for over twenty years in corporate finance including taking companies public and maintaining good status.

So why bother to go public? Because this one strategy can increase the value of your company many times over. And with our “Special Partner Program” we can target a very large market cap value for your company when and if you and the company are ready.

Growth as a Private Company

The best use of capital in a private stock company is to growth net earnings. Whether you are seeking a higher income and dividends for your shareholders or building the value of your company, higher earnings a measure and the fuel for continued growth.

However, most business persons and investors realize the additional capital invested in a “good” growing business will product higher returns of earnings and business value.
So, money is invested and a company grows.

The challenge is to grow the company as fast you can so everyone involved can get the benefit as soon as possible. And beating this challenge is very dependent on raising new investment capital.

As a private stock company, the options for investment capital are somewhat limited in source and quantity. Some typical examples for equity capital are family and friends, angles, venture capitalists and strategic partners. The debt capital sources include banks and commercial lenders that either is almost impossible to deal with their collateral and loan terms.

So what can we do to help you sell stock privately or borrow on some reasonable terms?


Following are options:

Private Placement Process

The most typical form for legally raising smaller amounts of equity capital for your business is a Private Placement Securities Offering. This form relies on an exemption from registration with the US Securities and Exchange Commission. There are very important rules to be followed for raising the money and usually a securities attorney is retained to help you create a Private Placement Memorandum (“PPM”) for presentation to each and every investor. The PPM helps protect you and your company from law suits if everything doesn’t work out as your investor expects or thought it would. The PPM containing your financials and other relevant information is what you are representing to the investor.

Legal and accounting fees can range from tens to a $100,000 dollars and can take a few weeks to a few months. We have on going relationships with lawyers and CPAs that emphasize speed and economy for our team clients. If you do it for the first and only time, you will probably spend more then are fees and waste significant time.

The acceptability of a private placement by potential investors can be a challenge for raising the money. Most licensed investment bankers won’t bother with a private placement especially if it is not part of a subsequent public offering. And any astute investor will be concerned about the liquidity or exit from the investment which means how an investor gets their money back in success or failure.

We can help you with presenting your private placement to families and friends, angels, venture capitalist, licensed investment bankers and institutional investors, Also, the financial structure of the deal may determine success or failure.

Not using a good team including a securities attorney and CPA could be devastating to you personally and your company. So if you don’t use us, please find another ethical, legal and experienced team that will help you and not ruin you.


Sooner or later, significant growth in the size, earnings and value of your company will mandate the company be a public stock company or a subsidiary of one another public company.

And, why should it be a public stock company especially it the simple fact that your company could be worth about four time more as a public company versus a private company given he same earnings.


Price Earning Share Evaluation

The share value of publicly traded companies is usually valued in terms of the earnings per share and the price earnings multiple (“PE”) which is: "How many times the price of a share of stock is worth in the market times the earnings per share." The total market value of company or “market capitalization" value is the total number of shares outstanding times the price per share. So the higher the earnings and/or the higher the PE, the higher the total value of the company.

One statement that has always impressed me is: “the true value of a CEO (or management team) is the value of their company’s stock.” Warren Buffet understands and appreciates the concept and so do I.


Public versus Private


One of the best legal strategies on Wall Street is realizing the gain for shareholders between the difference of being a private and public company. The value of a privately owned company is typically 3 to 5 times earnings and the value of a publicly owned company is 15 to 25 times earnings, and both private and public values are dependent on a large group of similar but not identical variables. Therefore public stock is worth 3 to 5 times the value of a private company stock.


Investment Liquidity


The difference between public and private price earnings ratio (PE) occurs from natural stock market forces concerned with liquidity or the ability to sell your stock for cash whenever you want. The stock of a private company is considered illiquid since there is no organized market to sell your stock. You may be able to sell your shares back to someone associated with the company but you are still dealing with a private company in a private transaction and the relative little money that you can sell it for reflects that fact. The demand for a particular company shares may vary and that will affect the PE multiple, but all things equal a public company’s shares will be worth 3 to 5 times more than a private company’s shares.


Value of Information


In addition, reporting public companies have to disclose their earning through quarterly reports to the SEC along with any significant events that can effect the a company’s performance and share value in the market. This reported information is valuable for making investment decisions.

The SEC does not recommend stocks, but it is concerned with transparency for all events that can affect the company. That means giving honest and complete information to shareholders and the public. A private company or even some non-reporting public companies either make no disclosure or very limited reports. Intelligent investors want more accurate information.


Public Stock Can Be Like Cash


Beyond the liquidity and full reporting of listed public companies, there is the ability for those companies to use their stock to raise more operating cash, to do acquisitions of other companies, their earnings and assets, to attract more good management and license or buy technology. Theses acquisitions could and should further increase the earnings and PE ratio of a company’s shares. Also timely reporting information is valuable for making investment decisions, and investors are willing to pay a premium for a stock that is public and reporting in the form of a higher PE ratio.

The factors discussed above affecting a share price of a company have to be coordinated and fine tuned to maximize the value of the shares. Most investors are interested in maximizing the share prices. And investors are willing to pay a higher PE ratio premium for a stock that is public and reporting.


Build Value With A Team


Building the market value of your company can be very simple but extremely challenging. Experienced business entrepreneurs and founders know that capital and management applied to a great business model can lead to very successful, profitable ventures and valuable companies. However, they also realize that investing their own time and energy is usually not enough to maximize the value of the company in our complicated world. Therefore attracting and keeping the best management team through public stock options is perhaps the most important value of being a public stock company.

These are some of the reasons that your private company could increase in value 3 to 5 times as a well run public company. Do you want to significantly increase your company value?

Significantly increasing the value of your company involves many activities that our team has experienced. Each opportunity is specifically different in many ways and requires careful analysis and planning. Also, integrity and honest by all parties is of maximum concern and importance.

 
   
   
 
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