Why the Pink Sheets?
They are the best alternative for a small company in today’s marketplace!
And this is also where some of the best-known companies in the world choose to trade on. These include: Heineken, Nestlé, Nintendo, Rolls Royce, Volkswagen, BAA Plc, BAE Systems, Cathay Pacific Airways, Liberty International, Peugeot, L'Oreal, Marks & Spencer and Neorx Corp.
The Pink Sheets offer many advantages to companies that want to take that “first step” in the public markets:
- ease of entry
- low costs and maintenance
- relaxed regulation
- access to investors
- audited financials are not required
- there are no asset or revenue requirements
- and companies do not have to report to the SEC or any other regulatory body
There are now over 5,000 small-cap securities currently listed on the Pink Sheets. These companies account for over $550 million of daily trading activity. And the number of companies who are moving from the NASDAQ (or other exchanges) to the Pink Sheets due to the regulatory issues, such as the Sarbanes Oxley Act, is increasing daily. These stricter financial reporting rules impose a financial burden on small and medium sized companies if they stay on the main exchanges.
The Pink Sheets are ideal for companies who:
- Want to become a public company but do not want to do an IPO (Initial Public Offering) because of the high cost and the length of time it takes to do one.
- Want to become a public company but do not want to do a reverse merger.
- Want to raise capital through private placements using the published stock price as a “benchmark”.
- Cannot currently find an underwriter for various reasons including market conditions at the time, little or no company history. Smaller foreign companies may find it even more difficult.
- Want to increase the value of their stock in the public market so they do not dilute their stock as much when they go to the public markets to raise capital.
- Want to acquire other companies using their public stock as currency.
- Want to provide an “exit strategy” for investors. A lot of investors will not invest in a company unless they have a way to get their money out. Having public stock gives them a way to do this.
