With public company’s $500,000 in pretax profit, you would be in a position to buy a private company grossing two million dollars. Its pretax profit would be $500,000. In third year, your public company could buy a private company grossing four million dollars and so on. This simple model of stock leveraged progression doesn’t factor into equation taxes and integration issues. Its purpose is to show that using publicly traded shares, a company can leverage its growth by using those shares as money. If public company trades in United States, shares are valued in U.S. Dollars. In many parts of world, US Dollars because they are a free trading currency are preferred over local currency.

If in first year of our example, your public company combined your $250,000 pretax profit with a million-dollar Private Placement, your first acquisition would be for five million dollars. In second year, you could acquire a ten-million-dollar cash-producing asset. In third year, you would acquire a twenty-million-dollar asset. Within five years, your annual revenues would exceed one hundred million dollars a year. It's all a matter of leverage and a mathematical reinvestment progression. You could work a lifetime and not convert a million-dollar private company into a hundred million-dollar enterprise. Going public allows you to do it within five to seven years. I run a merchant bank willing to do million-dollar Private Placement to jumpstart this leveraged investment progression. However, you must adopt cash and shares acquisition business strategy to qualify.

Becoming a Multinational Corporation

Public company status is a major step toward becoming a multinational corporation. What's difference between being a national company and a multinational corporation? It's difference between receiving Government funding or, instead, supporting local Government with corporate income taxes.

A company doing business in United Kingdom, for example, must pay British taxes on its profits. The same company doing business in Global Village will pay far lower taxes because it can select jurisdiction in which it pays its taxes. Within European Union, companies pay anywhere from 20% income tax to over 50% income tax. A multinational corporation can choose 20% tax jurisdiction. The British company, operating from Great Britain, has no such choice.

Government Funding For Your Public Company

Governments fund multinational corporations that create local jobs. A multinational corporation with markets in West and production in East will find most Asian Governments anxious to supply at least 50% of plant development costs and offer other inducements to creating local jobs. Governments in Africa, Middle East and Latin America have similar incentive programs. If multinational corporation chooses its production areas wisely, it can avoid import taxes into either EU or NAFTA.

Profiting From Being Public

Eventually, owners of your public company will want to sell their company. They'll sell their public company for at least four times balance sheet value of public company. The same leverage of share price over balance sheet that attracted your Private Placement investors will now work in favor of your public company insiders.

From raising money to selling company, benefits of being a public company far outweigh any advantages of remaining a private company. The key to success is using advantages of being public while avoiding mistakes made by most CFOs who take their company public. If you fail to avoid common public company mistakes, being public will be a nightmare. You'll have little choice but to take your public company private to avoid bankruptcy.

The Only Strategy For Success

Going public and becoming a multinational corporation is only workable 21st Century business strategy for success. If you need advice and help on making public market your key to business success, email me at: Beowulfinvestments@Earthlink.net

Author’s note: I expect this article to be translated into Chinese and appear in a PRC financial publication in Summer of 2005.

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