| Screen Test for a Direct Public Offering |
| One: The business
would excite prospective investors, making them want to share its future. |
| The day will soon come when millions of Americans will become
securities analysts, using computer-based tools for screening and selecting among
thousands of companies. We will be creating and managing personalized "mutual
funds," through our employer’s retirement plans and our own savings. Our stock
selections will be based upon our individual criteria and financial analysis programs.
Until then, companies will have to attract us with a story close to our personal
interests. We’re not ready for the "dull but good" businesses yet. |
| Two: There
is a history of profitable operations under the Company’s present management. |
| We have learned that excitement is not enough in a Direct Public
Offering. The shoppers’ "impulse purchase" phenomenon seldom happens when
the amount involved is at least several hundred dollars. A compelling presentation may
work for charitable donations, but people stop and analyze before buying a company’s
shares. So . . . what about all the traditional IPOs of companies that barely have
revenues and are years away from their first profits? That’s a very different market
than the one for DPOs. The selling is done by telephone calls and meetings with money
managers for institutional investors, with promotional efforts directed to the individuals
who are to buy in the aftermarket. DPOs are sold when the prospectus is read, by cautious
individuals spending their own money. With some exceptions, they want proof that
management can turn a profit. |
