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Direct Public Offerings
Book

Direct Public Offerings

The New Method for Taking Your Company Public

Drew Field
Sourcebooks, 1997
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Editorial Rating

5

Qualities

  • Controversial
  • Background

Recommendation

Drew Field wrote this book in 1997 to encourage entrepreneurs to bypass Wall Street and float their shares directly to individual investors. In hindsight, we can see that almost everything that Field predicted in the book was wrong, but it is precisely due to the enormity of his mistakes that this book is relevant now. Field’s premise was that brokers were ignoring equity issuance and individual investors in favor of big-ticket, M&A-style transactions and institutional deals like securitizations. This shift had created an imbalance in which struggling entrepreneurs were cut off from the capital that they needed to get their businesses off the ground. Of course, what happed in reality was exactly the opposite: A boom in venture capital and the stratospheric rise of the IPO market created an equity bubble of epic proportions, and many start-ups that should never have made it past the garage door raised hundreds of millions of dollars. All of this brings us to the present day, when an IPO backlash has dashed the funding hopes of many public wannabes. To the founders of these companies, getAbstract asks: Direct Public Offering, anyone?

Summary

Taking it From the Street

This is a good time to go public. Increasingly, individuals favor saving and investing over spending and incurring debt. As investors, people now prefer the vision of entrepreneurs to the bloat of large bureaucracies. Finance will increasingly break away from Wall Street’s control and into "direct relationships between corporations and investors" as technology makes it easy for individuals and corporations to communicate directly, quickly and efficiently.

Direct public offerings take advantage of today’s worldwide shift to individual share ownership, a trend that began in the mid-1970s and continued into the 1990s. This trend has been fueled by many factors, including the worldwide increase of micro-lending, in the U.S., Europe and even in the developing world.

Corporate shares have been marketed directly to particular markets in special ways for many years through various vehicles. These include employee stock purchase plans and rights offerings that prioritize selling new shares to current shareholders. Additionally, some corporations have programs that allow an investor to become a shareholder through direct investment, although the...

About the Author

Drew Field,  a securities lawyer and CPA, has provided direct share marketing advisory services since 1976. His articles have appeared in more than ten banking journals in the U.S. and in Management Review, Business Horizon and San Francisco Business Times. He has been published or cited in in Inc., U.S. News and World Report, The Wall Street Journal, The Los Angeles Times and The San Francisco Chronicle

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