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The Process of a Direct Public Offering


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THE INSIDE ADVANTAGE OF A DIRECT PUBLIC OFFERING

direct public offering

A direct public offering is one of the advantages of networking with a public corporation.  It is no secret that many employees these days are paid with stock options in their company as a partial substitute for a salary.  This gives workers the chance to not only put together a strong investment portfolio, but also increase the value of their shares through hard work and innovation.  While stocks are available for anyone, direct public offering shares are more limited.  These are shares of debt rather than value, issued at a time when a corporation needs to increase its capital.  These corporations, however, reward those who have worked with them — employees, suppliers, customers, and so forth — in order to increase goodwill and retain loyalty.  They are less expensive than traditional investment bonds and directly remove the middleman of banks or venture financing.

WHAT CAN A DIRECT PUBLIC OFFERING DO FOR YOU?

If you were a trucking company that often received contracts from a major retail store like Wal-Mart, you could get access to a direct public offering when the corporation decided that they needed to quickly gain an amount of capital.  You could directly use any stocks of Wal-Mart you currently have to either purchase the offering price, plus you would ensure that you retain credibility in the eyes of a major customer.  There are some drawbacks of this type of investment, however, as a company must be able to raise all the capital that is needed, without the help of banks or loans.  Initial sales may be difficult and may even cost more than the first efforts to assemble the offering, making it necessary to attract purchasers quickly.  Finally, it will take time away from other financial concerns of the company as it is processed.

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