The IPO marketplace has become extremely difficult for emerging growth companies.

After the recent onslaught of SEC charges, changes and mandates, brokerage firms sought to limit their exposure by participating in offerings for larger, established companies. According to ipohome.com 194 companies went public in 2005 with the average raise of $175 million. According to Hoovers Online the first six months of 2006 showed 91 companies going public with the average funding of $207 million. This basically means that a company who is seeking to go public would have to possess almost a billion dollar post IPO valuation to attract an underwriter.

The landscape for underwriting an IPO from smaller regional broker-dealers has also changed dramatically. With the introduction of online trading most brokerage firms have abandoned the retail segment of the business. Why would an investor buy stocks from a stockbroker when they can purchase them online for a fraction of the cost.

Most boutique investment banking or broker-dealer firms do not meet NASD regulatory and financial requirements to offer companies a “firm commitment” underwriting and therefore can only offer a “best efforts” underwriting. They can provide institutional buying but they can not provide retail distribution to the small investor. ePO provides them with the retail side of the equation.
ePO concentrates its efforts on companies whose offerings range from $10 million to $100 million and qualify for NASDAQ or AMEX listing. Potential ePO Clients usually have been in business a minimum of three years, have earnings in excess $1 million per year (on a pretax basis) and can demonstrate substantial future growth potential.

ePO is NOT an underwriter and is not acting as a broker-dealer or agent of the company issuing the securities. ePO does not make recommendations nor does it offer judgments as to the merits of any issuer’s public offering.
Client companies offer their securities directly to the ePO Members (Investors) database allowing exposure to a large number of both US and foreign investors. This results in an increased shareholder base, a substantial savings on underwriting fees and related costs such as printing and road shows. ePO estimates a company will save approximately 80% of the total cost of their underwriting fees and expenses. A $10 million offering facilitated by ePO could save a company as much as $1 million in fees.

Traditionally, brokerage firms determined who would receive IPO shares. Shares were only offered to their largest clients, institutional and pension fund managers or persons who had an ongoing business relationship with the firm. These investors are usually short term players who are only interested in an immediate return on their investment.

ePO does not attract the short term investor. Investors, who become ePO Members usually have a long term investment outlook and are drawn to companies that can exhibit substantial growth potential.

Companies who use ePO end up with a larger number of shareholders who are purchasing their shares because they like the fundamentals of the company and therefore have a longer term investment outlook.