“This little piggy went to market, this little piggy stayed home….” – a children’s nursery rhyme

With only 24 hours left for businesses to file on time and based on some wonderful feedback from our subscribers, I felt this is the ideal time to revisit the basics of my small business practice and micro caps focus.

We’ll re-explore the small caps markets for a few vested parties:

• You, my dear reader, who may be a potential or current client and may need a quick refresher;

• my law clerk interviewees, who will unknowingly reveal if they’ve been reading these posts;

• and myself, because even I need the occasional reminder as to why I entered this line of work in the first place.

There are three main places for a small business to list itself:

• The National Association of Securities Dealers Automated Quotations (NASDAQ). It has three tiers, but we will only focus on the Small Cap one– NASDAQ Capital Market, which is an equity market for companies that have relatively small levels of market capitalization. NASDAQ is the second-largest exchange in the world, following only…
• NYSE MKT, the unsung hero of small-cap public listings, and…
• Over The Counter Markets (OTC), which include OTC Pink and 2B. These exchanges are conducted directly between two parties and with little or no supervision whatsoever.

To list the company on an exchange, you must comply with the regulations of the Securities and Exchange Commission and be approved after an arduous initial public offering (IPO) process. This multistep process includes filing a registration statement with the SEC, notifying the agency of your intent to go public, revealing your existing financial status, including revenue and debt history, and declaring the amount of money sought in a public offering. That is of course a condensed version but provides a good basis for what to expect.

One of the best parts of this scenario is that all three marketplaces may want to include you. They are all highly competitive, even with each other, but can offer you exposure, money and connections that you may not otherwise accomplish.

Many companies rush into going public without first understanding all the requirements and burdens involved.  The appropriate marketplace will depend on your business specialty and how much ownership you’re willing to offer for fresh capital.  You had a vision for your business. If a public listing helps you achieve that vision — or is the achievement in itself — then continue to stay tuned for the next several installments, as we’ll cover the basics of each of the aforementioned areas.

For the interim, I welcome you to visit the Brinen & Associates Client Services Small Caps/Micro Caps page and read some of our Success Stories.  As always feel free to leave a comment about any recent dealings you’ve had with these markets that may be helpful or useful.  Just remember, many of us already, or want to, work with these markets, so let’s not punch below the belt.