Investment Banking

Welcome to Part III of our UpListing Series. In this part, we’re going to talk about investment banking.

Meeting the UpListing Requirements

If you’re uplisting to NASDAQ or NYSE and meet certain minimum requirements such as Stockholder’s Equity and number of shareholders, there may be no need to raise capital. However, many companies don’t meet the requirements off the bat and need to undertake a simultaneous registered offering in order to meet the thresholds required by a higher exchange.

For example, both exchanges require Shareholders’ Equity of at least $5 million, and a minimum of 300 round-lot shareholders. Some OTC companies do not meet these requirements. Therefore, they may need to undertake a registered offering in order to raise the capital required to meet the $5 million Shareholder’s Equity requirement. They may also need to bring in additional shareholders to meet the 300 round-lot minimum.

What Investment Banks Do

If your company needs to undertake a registered offering, then you will need an investment bank to underwrite such offering. In that capacity, banks provide you with the capital you need, taking on the risk of the investment, for a fee.

In addition to meeting the requirements for an uplist, a registered offering might allow your company to raise capital on more favorable terms than a PIPE or other type of financing. We suggest you raise the minimum amount of funds necessary to get to the higher exchange and then raise additional funds once you have completed your uplisting.  Financings higher exchange listed companies are often accomplished on more favorable terms.

Choosing an Investment Banker

We educate our clients on the process, costs and timing for a registered offering so they can make a fully informed decision when choosing a banker and evaluate, with their counsel, the terms and proposals. Here are some of the preliminary considerations when deciding which investment banker is best for your company:

  1. Capabilities/Credentials/ExperienceWho will lead the equity capital markets and syndication functions for your company’s offering? Who will be your company’s primary day-to-day contact at the banking firm? What are the most relevant transactions they have worked on and how successful have those deals been?
  2. Positioning/Knowledge of the company/valuation methodology.What is the recommended positioning of your company? What is the proposed strategy for positioning relative to other comparable or competitive companies? Which companies represent the best comps? How would your company be differentiated from some of the recent offerings (attempted or completed) in your sector? Has the bank provided a description of the valuation methodology it is using to value your company? What valuation metrics will investors focus on?
  3. Shared values.Take your time and make sure you are picking an investment banker that shares your values and spirit. You need to work with someone who is excited about your vision for the company. What level of vetting have they conducted with their research analyst to date and what can they share about their analyst’s view of your company? Is the bank currently working with any of your competitors? If so, has it decided how to address potential conflicts of interest?
  4. Execution strategy.Are the senior members of the investment banking team committed to attending the organizational meeting, drafting sessions, and other key meetings? What process does the bank follow for pricing and allocating shares? What are the bank’s views on stabilization activities and strategies, including willingness to commit capital?
  5. Aftermarket support. Have the banks described their firms’ aftermarket services, including non-deal road shows? What conferences and other industry or investor events does the bank sponsor that are suitable for your participation? Ask the bank to describe its research coverage expertise in your industry? Does the bank have strong retail distribution capabilities?

These are just some of the questions to consider when choosing an investment bank. It’s an important and often complex decision. At, we have worked with many of the small and mid-cap investment bankers who underwrite the types of registered offerings mentioned above. We can help you with the decision process and lead you to the investment bank that best meets your needs.

In Part Four of our Series we will talk about the Seven Benefits of Uplisting to a Senior Exchange.