Can somebody take me public, please? The fickle IPO market and why a reverse merger might be the right answer.

Does anybody know exactly what it takes for a company to go public these days? It seems as though everyday you pick up the newspaper, somebody in the IPO queue has cut their offering price (maybe for the third or fourth time) or simply pulled the offering altogether. Not much more than 5 years ago, the toughest part of the IPO process for many companies was deciding where to throw the party the night the offering priced. Nowadays, hiring an investment bank and drafting an S-1 may get you to the door but it certainly won't guarantee you entrance to the club. You still need to convince the notoriously unpredictable bouncer they call "the Market" to deem you worthy and let you past the velvet rope. More and more companies are failing that final test, leaving them with nothing to show for the months of work and hundreds of thousands (if not millions) of dollars put into the process.

Often times, the reason that a company is unable to clear this final hurdle remains a mystery, chalked up to an all encompassing "change in market conditions." It may not have suffered a material setback in its underlying performance or outlook and might still make for a very attractive long-term investment opportunity. It has a compelling growth story, a solid management team and a proven business model. Simply because its industry has "fallen out of favor" on Wall Street or is no longer "hot" or "sexy" might be enough to deny the company the growth capital and liquidity that it needs and deserves.

An alternative to the traditional IPO has emerged, taking much of the risk and uncertainty out of the process. This alternative, consisting of a privately negotiated investment round in conjunction with a reverse merger, mirrors the benefits of the traditional IPO while ensuring the speed and certainty that Wall Street cannot.

Reverse mergers aren't new--indeed two American business icons, Armand Hammer and Ted Turner, utilized reverse mergers to take their companies public. Unfortunately, in recent years the transaction has often been misused by a few players looking to make a quick buck and move on. These hucksters usually have no interest in what business you're in but rather how quickly they can convince others that it's a great stock so that they can dump their shares on the market. Be sure to stay away from this type of transaction.

However, if utilized correctly, the reverse merger can be a very attractive means of going public, especially when combined with a substantial round of investment. ARC Investment Partners, a new firm based in Beverly Hills, has established itself as the leader in this type of transaction, which it calls the Merger IPO ("M.IPO). ARC works with companies to not only raise money and execute a reverse merger but also provides a suite of portfolio operations and aftermarket support services to ensure a successful transition to the public markets. Services such as board recruitment, SOX compliance, and after-market non-deal road shows are part of the M.IPO model.

If your company could benefit from going public but wants to avoid the risk and uncertainty of the traditional IPO process, the M.IPO should definitely be considered as a new, compelling financing/liquidity alternative.

Information for this article was provided by Arc Investment Partners. Please visit www.arcinvestmentpartners.com for more information, or contact Richard Gammill, head of Transaction Execution at ARC Investment Partners, with inquiries 310-402-5901.