A Direct Public Offering (DPO) is a method by which a business can offer stock directly to the public.


A DPO is similar to an initial public offering (IPO) in that stock is sold to investors, but unlike an IPO, a company uses a DPO to raise capital directly and without the assistance of an investment banking firm or broker-dealer. Following registration with the Securities and Exchange Commission and subject to compliance with state blue sky laws, a company can sell its shares directly to anyone, including customers, employees, suppliers, distributors, family, friends and others.[1]

Not all DPOs require registration with the Securities and Exchange Commission. Some offerings will qualify for an exemption from the federal registration requirements. The most commonly used exemptions are for intrastate offerings and offerings under $1 million (the Rule 504 exemption). In such cases, state level registration is generally required. State level registration is usually less onerous and time consuming than federal registration.

There are law firms and other service providers which offer to manage a DPO for well under $100,000 and in less than a year.[2] The process and time required to become public is very similar to the process utilized by large companies to complete an initial public offering, except that many DPOs are marketed via internet advertising and ads direct to consumers.[3] Some, like Manhattan microbrewery Spring Street Brewery, advertise the sale on the products they sell (Spring Street printed a notice on the back of every bottle of beer.)[4]

Offerings that do not require federal registration can be done more cheaply and quickly - costs can range from $25,000-$50,000 and it can take as little as one month to complete the process.

Direct public offerings are primarily utilized by small to medium size companies who are unable to attract the interest of an investment banking firm to represent them in a traditional initial public offering. Investment bankers represent companies which can attract and support large financing from which they can earn a commission.

Direct public offerings are now being issued on crowdfunding platform sites. This style of DPO combines the success of WIT capital and platforms like Kickstarter. An example of this type of platform would be IPO Village [5]

Pros and consEdit

The advantages of a direct public offering include: broader access to investment capital, the ability to utilize stock to complete acquisitions and stock options to attract and retain employees, enhanced credibility and providing early investors with liquidity.

The disadvantages of a direct public offering include: the company must raise its own capital without the assistance of professional financiers, the process has significant cost which offsets any capital raised, it takes management time and attention from business operations and there are ongoing financial and legal reporting requirements.


Any company following the applicable rules and regulations can go public by direct public offering. There are no sales, profit, asset or other traditional requirements or qualifications.

Companies interested in completing a direct public offering must have:

  1. a complete set of internally generated financial statements
  2. financial statements audited by a qualified accounting firm
  3. a registration statement filed and declared effective by the Securities and Exchange Commission

After the Securities and Exchange Commission declares a registration statement effective and subject to compliance with state blue sky laws, a company may sell its shares to the public using a variety of methods. Upon completion of the public offering, the company may find a market maker to file an application for a trading symbol and stock listing.

Some companies attempt to organize their financial statements, audit and legal filings on their own, but many utilize direct public offering services offered by a consulting firm.


See alsoEdit

External linksEdit

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