Today I got yet another email, unsolicited of course, from a guy claiming to have a unique angle with shell companies and he could reverse merge a company into a shell and have it trading in 30 days. My first instinct was to just laugh it off as shell scams are a dime a dozen but this guy was persistent so, against my better judgment I got on a call with him and his ‘partner’.

Like a broken record he kept interjecting ‘we’re the best’, ‘we’re the best’ (though they never did actually answer any of my questions). They had shells that they set up and charge $200k and retain 10% equity, yeah right! What legitimate company would even entertain a proposal like this with a shell? By the end of the call they admitted that they have never done this. They have never had an opportunity to use this ‘unique’ process to take a company public but give them $200k and they can experiment on you and if they lose your money, no problem, they’ll just change their website, company name and do it all over again, it’s the name of the game in the shell scam industry. Chinese companies are the easiest target and after that, any company in the US that wants to take short cuts is prey.

Here are the facts, reverse mergers almost never work and the legitimate mergers are done when an entrepreneur owns the shell and wants to merge a profitable and stable company into the public shell and retain an equity position and many times those deals are not only impossible to find but the terms are horrendous for the company merging into the shell.

A direct filing via S1 is the only way to go on the OTCBB, don’t fall for scams and if you are doing a direct filing, make sure the attorney or consultant you are using offers a complete turn-key solution complete with corporate structuring, globalization, strategic alliance facilitation, legislative tie in, etc. Don’t forget your PCAOB audit and 15c211 filing and be prepared for a massive IR campaign with a PR build that starts 3 to 4 months before you’re even public.

Don’t be a chump! Don’t put yourself out there to be taken advantage of by predatory scammers and con artists. Going public can be incredibly rewarding as long as you do it properly without falling for short cut lies. Do it right the first time and your problems are over!

Looking to Grow Your Company? , find out how to Structure Your Company and Grow Fast With an IPO

Are you a business owner raising capital with a Regulation D Rule exemption (504, 505 or 506) also referred to as a Private Placement Memorandum, PPM or Offering Memorandum? If you are using this mechanism to raise capital then you’ll, no doubt, have to have a solid comprehension of the most distinct and important part of the Private Placement Memorandum referred to as the ‘Offering Circular’.

When your consultant or attorney is asking you for details on everything from business location to management, from dividends to risk details, you need to make sure that this information is complete and accurate. You’ll need to audit the documents after they are completed. A solid Offering Circular has kept countless companies from being sued by investors that didn’t get the investment return they were anticipating.

While the business plan is meant to grab the initial attention of the investor or funding source, the Offering Memorandum is meant to spell out the down and dirty details of the venture so that you are protected from lawsuits down the road, while simultaneously exposing the various ins and outs of your venture to give a ‘reality check’ to the investor before they hand over the cash.

The offering circular needs to be powerful yet very compact without the redundancies of using space to say the same things over and over again to pull the investors attention from the negative to the potential profit margins or management’s impressive pedigree. With all this said, yes it’s true the offering circular is one of the parts of a PPM spells out the technical aspects of the enterprise with a focus on inherent risk of investing but this can be done in a balanced way to also demonstrate the positive aspects of your venture by giving solid descriptions of your management team and, in place, distribution centers and contracts in place ready for capitalization.

When authoring the offering circular demonstrate the risks with a well balanced demonstration of the system in place to overcome these risks and dominate your market niche.

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For companies wanting to go public the basic understanding is to find an S1 attorney that will look out for your best interest and make the process easy. But what you’re not thinking about is the sub-sector of predatory attorneys that just look at you as easy prey. They’ll jump into your company, distract you by confusing you with technical jargon, fast talking and stressful scenarios that could never happen and when you’re not looking they’ll carve out a nice fat piece of equity on top of their excessive fees that pile up as they rob you blind with their insularely fees.

Qualify your S1 lawyer the way you would a blind, deaf, mute, quadriplegic proctologist before you go in for surgery. The fact that they can do what you’ve read in their promotional material is possible but most likely won’t happen, not that it can’t happen it’s just they can’t make it happen. Got it?

Be wary of S1 attorneys that will try to confuse you and distract you from your original goal. Let’s say it was your goal to go public on the OTCBB, the attorney who wants to take you for a ride will distract you with statements geared towards far fetched issues to scare you into submitting to their, not so far off, actions of adding fees, slicing off equity and other things of this nature. A perfect example is an attorney who gets involved with the client’s PPM share price with oppressive authority. If you’re company has a valuation of $3m they are trying to tell you to sell shares pre public for $1.00 or so which is absolutely, completely unrealistic, especially when you look at existing in the post public arena. They will tell you that at .20 cents per share pre public your pre revenue company will never have a chance to get on the NASDAQ (NASDAQ should be the furthest thing from your mind at this stage as you should be focusing on your pre public share price and post public IR). If the predator S1 lawyer sees you’re organized and have a solid comprehension of the process they will take away your confidence in those around you to gain more dependence by you. They will tell you that you can’t pay your IR firm the way you’ve already pre negotiated or that they are dirty or whatever.

When it comes to the PCAOB audit they will absolutely insist on you using their guy even though he charges twice the amount of other firms that gave you a quote and you can rest assured that the markup is their commission for scaring you into using this firm.

At the end of the day the predatory S1 attorney will confuse you, up-sell, over charge, scare, belittle and whatever else they have to do to make sure that at the end of the day they can get away with charging and taking everything without having to deliver anything and it will be structured so that the blame falls on you for not fulfilling the obligations set on you by the attorney. Good luck out there!

FREE Download of the Ground Breaking eBook Taking A Company Public, to find out how to take our company public, structure a company, globalize your concept and much more. Click here to get Free Pre IPO Investor Alerts