Why Should Companies Go Public in the US?

I am in London meeting folks who work with non-US companies and take them public. Some go public here in the UK, others in the US.

There has been extreme dissatisfaction for many companies who chose to list their securities on the Alternative Investment Market or AIM in the UK. It was attractive at first in terms of ease and speed of getting listed, but in many cases liquidity simply never developed in the stocks. Yet for many there are UK ties making continued listing on the AIM important.

Some of these companies are considering a variety of options, including cross-listing their stock in the US, or abandoning their AIM listing for a US market. And more and more European private companies are considering reverse mergers in the US even if they do not have any US ties in their business.

There are various issues to examine for each company and its situation before determining the best path. Some of these include what ties the company has to the US, how illiquid the stock is on AIM, what real prospects the company has for success, whether the company can raise financing through its AIM listing, and others.

In general, though, most here in London perceive that the US stock markets, from the OTC Pink Sheets to the Pink Sheets’ new OTCQX to the OTC Bulletin Board and the higher exchanges provide greater liquidity and access to capital than the AIM. It appears, though, that companies most likely to consider a cross-listing or reverse merger into the US have some tie here. That said, last October we completed a reverse merger for a UK-based company with no US ties that raised $13 million at the time of going public.

The greater regulatory issues in the US also provide greater confidence and transparency, giving invest0rs a higher comfort level. Plus some foreign companies can avoid becoming full US reporting companies on the OTC Pink Sheets or OTCQX. It  appears this trend will continue for the foreseeable future.

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