IPO CostsWritten by William Cate
IPO Costs By William Cate Published January 2000 [http://home.earthlink.net/~beowulfinvestments/] [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]The following data is taken from "Going Public" by James B. Arkebauer (1994) and IPO cost website at: http://www.intranet.ca/~tgil/p2.html You should keep in mind that costs vary based upon complexity, size of underwriting and history of private company. The following IPO costs would be reasonable for a company with over $2 million in gross revenues and a 3-5 year operating history. A startup company would pay less than half this estimate to do an IPO. In some cases one or both sources acknowledge a cost listed below, but fail to offer an estimate. In those cases, I've supplied an estimate based upon my IPO experience. Pre-IPO Costs$300,000 Legal Costs$175,000 Accounting$80,000 Printing & Mailing$100,000 Translation$30,000 Market Prep Costs$90,000 Investment Bankers$50,000 Consultants$50,000 Moody's or S&P$6,000 Blue Sky Fees$20,000 (California only) Transfer Agent$2,000 Mgnt & Admin$200,000 SEC Filing Fee$5,000 Taxes$15,000 (Estimated) Total$1,123, 000
| | Angels, Are They Real?Written by William Cate
Angels - Are they Real? William Cate Published February 2000 [http://home.earthlink.net/~beowulfinvestments/] [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]They're real, but few survive. High risk investing is dangerous to your bank balance. The process toward extinction is that an angel risks money in one venture. It fails. Then, he joins a group of angels and risks money in another venture. It fails. At this point, angel usually hands in his or her wings. To be an angel, you must have considerable discretionary income. This is why most angels are attorneys, accountants, medical doctors or successful small business people. Attorneys and accountants often form angel groups from their client base. Their goal is to take ride on roller coaster without paying for ticket. Their clients invest in project and they get a piece of action. Since action is usually bad, all they get from effort is a reduced client base. Angels want to invest within fifty miles of their location. This allows them to visit office or plant of investment on a regular basis. As company starts to fail, proximity card encourages angel to try to take over business investment. This mistake is often made by successful small business people. I'd defer to a study on odds of attracting an angel to your company. However, my experience suggests that an angel will invest in about one company out of every three hundred that send angel their business plan. My experience is based upon working with San Francisco Bay Area Venture Capital Clubs over a decade ago. Given greater investment interest today, your odds may be better than 1-in-300. Eighty-five percent of small businesses fail. Among 15% that succeed are franchises and professional offices. My guess is that an angel has about one chance in ten of making money on a risk capital investment. The angels think they can beat odds. They're wrong.
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