What is an IPO?

Most likely you have never been able to purchase IPO shares of a company going public so we at ePO would like to explain the basics of IPO’s.

IPO stands for Initial Public Offering. This is the first time that a private company is offering the buying public a chance to purchase the common shares of stock in their company. Shares of stock are also called securities. Only licensed stockbrokers or Officers and Directors of the company can sell securities.

Why do companies go public?

There are many reasons why a company chooses to go public. It usually is to raise capital from public investors to expand their business.

When a private company wishes to go public they file a registration statement with the Securities and Exchange Commission (the “SEC”). The company also has to supply fully audited statements by a CPA firm for the last three years they have been in business. It can cost several hundred thousand dollars to go public so this is a very serious business decision for a company. Once a company is public they have to report their financial progress each quarter to the SEC and have to submit a fully audited end of year financials to the SEC. The company also has to report, on an immediate basis, any material changes that have occurred i.e.: management or adverse information. The SEC is basically there to protect investors and make sure public companies adhere to a strict code of ethics and financial reporting. This type of reporting also gives investors transparency so they see exactly what is going on in the company.

Most large companies go public through a stock brokerage firm or underwriter. The underwriter sells the IPO shares of the company through its stockbrokers to its best clients, usually wealthy individuals, pension fund and institutional managers. Underwriters consider it a perk or privilege to allow clients to purchase shares of IPO’s. That is why for the last 100 plus years the small investor has never been able to purchase IPO shares of stock. If you ask your stockbroker to purchase shares of an IPO that their company is underwriting they will either tell you there are none available or you do not qualify because of the risk factors of purchasing the IPO shares. They will tell you IPO shares are for “sophisticated investors” who can afford to lose all of their investment. So when was the last time an IPO went to zero after it started trading in the public marketplace? How’s about never! Of course your broker will be happy to sell you the same shares five minutes after the company has gone public and most likely the shares price has increased 15 to 20%. This is called buying shares in the aftermarket or “after” the company has gone public. If you have a moment check out the 2004 Annual IPO Review. You will see for yourself how buying IPO shares can substantially increase your returns.

Why ePO?

ePO levels the playing field. The small investor has the same opportunity to purchase IPO shares as wealthy investors, fund managers and institutional investors.

ePO provides a turn key technology solution to emerging growth companies that are seeking to go public and raise between $10 million to $100 million dollars. It is important to note that these companies must also qualify for listing on either AMEX or NASDAQ small cap stock exchange.

What ePO has done is essentially level the playing field by allowing the small investor, who becomes a Member of ePO, to purchase IPO shares directly from a company. With ePO, Members never pay a commission or ticket charge for buying IPO shares. They only pay a small monthly membership fee. By using ePO’s technology solution a broker-dealer or company can sell their IPO shares directly to our Members online using the traditional IPO pricing model or via a silent Dutch Auction bid process. The bid is the price an investor is willing to pay for the stock. This process enables our Members to participate in the IPO process. For a step by step explanation of the Dutch Auction Process click here.

With ePO all investors are created equal. Regardless of your investment experience or the amount of money you have to invest, the bidding process treats everyone the same. All monies are held at Wells Fargo Bank Escrow.

Think about it!

Why have the brokerage firms excluded the small investor from buying IPO shares for over 100 years? Because IPO’s make a ton of money for their big clients. Happy clients don’t move their accounts or transfer their assets.

The whole idea behind ePO is to give you, the small investor, the same opportunities that the privileged few have had since the first IPO share was sold in this country. Isn’t that what America is all about, equal opportunity for all.