How do you go public?
There are three ways to become a public company, and we've done all three: 11 direct listings, 4 reverse mergers and 2 IPOs. The right one depends on your stage, goals, timing, capital needs, the condition of your financial records and what's available in the market. We plan the strategy and the path around you.
The three routes, side by side
Direct listing
- Typical timeline, once capital is in place 9 to 10 months
- Raises money at listing No
- Relative cost Lowest of the three
- Where you usually land OTC market
- Who sets your valuation You and your investors
- Who has to agree No underwriter or investor; regulators review your filings
- Main risk It takes longer
Reverse merger
- Typical timeline, once capital is in place 5 to 6 months
- Raises money at listing No
- Relative cost Middle, plus the cost of the shell
- Where you usually land OTC market
- Who sets your valuation You and the shell's holders
- Who has to agree The shell's holders
- Main risk Inheriting the shell's history
IPO
- Typical timeline, once capital is in place 7 to 8 months
- Raises money at listing Yes
- Relative cost Highest, including the underwriting fee
- Where you usually land Nasdaq or NYSE
- Who sets your valuation The investment bank
- Who has to agree An investment bank
- Main risk A bank may not take you on
Why not a SPAC or a Regulation A+ listing? A SPAC merger brings sponsor dilution, investor redemptions and a deal that can fall apart late, so we rarely recommend one for a smaller company. Regulation A+ is a way to raise money, and a larger Tier 2 offering can lead to a listing, but it adds an SEC review and costs that a private raise followed by a direct listing usually avoids.
Five questions that decide the route
- Do you need a large amount of capital on the day you list?
- How much does speed actually matter, and why?
- Do you need a senior exchange now, or is that a goal for later?
- How clean and audit-ready are your financial records?
- Is a clean public shell available at a sensible price?
Absent a specific reason to do otherwise, we usually recommend a direct listing: it's the least expensive, carries no inherited risk, and doesn't depend on anyone else's decision. We recommend a reverse merger when speed has a real value and a clean shell is available, and an IPO when a bank is interested without needing to be convinced.
Also worth understanding: clean public shells, which are part of the reverse merger route.
Why most smaller companies should start on the OTC market
A Nasdaq listing brings requirements the OTC market does not: board committees, paid independent directors, directors' insurance, and higher legal, audit and listing fees. In our experience the difference can be half a million to a million dollars a year or more. A smaller company can rarely carry that.
There is also the question of timing. A company that lists early, at a modest valuation, has years to build value with the four levers. A company that waits, raises round after round at higher prices and then lists is asking the market to support a valuation it has not earned.
If you're building it, it holds. If you're inflating and you list, it pops.
Common questions
Will investors take control of my company? Not by default. A direct listing or reverse merger involves no bank or venture fund setting terms. You decide how much of the company to sell in your private placement, to whom and on what terms.
Who decides what my company is worth? Before listing, you and your investors agree on a price in your private placement. Once your shares trade, the market sets the price day to day. In an IPO, the bank and its investors set the offering price.
What does it cost to stay public? Ongoing costs include audits and quarterly reviews, legal and filing work, the transfer agent, and exchange or quotation fees. They depend on your size and where you list, and we estimate them with you on the first call. As the company grows, especially through acquisitions, those fixed costs become a smaller share of the business.
Comparing the routes: quick answers
Which route to public is fastest?
A reverse merger, at about six months. An IPO takes about seven to eight months, and a direct listing about ten. See the full timeline.
Which route costs the least?
Usually a direct listing. A reverse merger adds the cost of a shell, typically about $300,000, and an IPO adds underwriter fees of 6% to 8% of the raise plus expenses and warrants.
Do I need an investment bank?
Only for an IPO. 15 of the 17 companies we have taken public used no bank. See going public without a bank.
Which route do most small companies use?
A direct listing. 11 of our 17 listings were direct listings, 4 were reverse mergers and 2 were IPOs.
The route is how you get there
What you build afterward is the point. Every engagement starts the same way: a written plan, then organizing the company and raising from your own network, so there is capital in place before the listing begins.
What it costs. Every engagement starts with The Four Levers Program: four one-to-one working sessions and a written playbook, about 30 days, $10,000 fixed, with nothing owed after. If the plan calls for a raise, Raise-Ready is $15,000, fixed, with 90 days of support. Listing, and the advisory work after it, are on a monthly fee plus equity, agreed in writing before each step starts. You can stop after any step and owe nothing further.
Third-party costs are additional and paid directly to those providers: accounting, audit, legal, stock exchange, transfer agent and filing fees. We'll estimate them once we've seen your financials. As a guide, they typically run:
- Direct listing:$300,000 to $500,000
- Reverse merger:$400,000 to $600,000
- IPO:$600,000 or more, before underwriting commissions
You don't need this money sitting in the bank. In almost every case, the private placement is structured so you and your team can raise capital from your personal and professional networks to cover these costs, often with growth capital on top, and sometimes capital for acquisitions too. Your own outlay is the plan and the preparation. The people who already know you pay for the rest.
Not sure which path fits? Answer 8 questions to see whether a direct listing, an IPO or a TSX Venture Capital Pool Company reverse merger most likely fits your company. Find your path
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