Good Morning,The goal of this update is to share a meaningful change in our potential IPO strategy and the reasoning behind our decision. Given the impact of the Coronavirus and following many discussions with several investment bankers, we believe that the current environment actually provides a unique and rare opportunity to accelerate acquisitions.
In order to accelerate acquisitions, we need to provide liquidity through cash or publicly traded stock to the companies we want to acquire. We believe publicly traded stock is significantly less dilutive to our shareholders.
Given this, we plan to file our 211 for an OTC listing after we close our Regulation CF on the Wefunder platform. Our Regulation CF closes this coming Wednesday, April 29th. We have been told the OTC listing process takes approximately eight to ten weeks, which should result in a public listing sometime during the first half of July.
The OTC listing will provide DBG with publicly traded stock to accelerate our acquisition strategy. We can then uplist to the NASDAQ when we want to based on market conditions and after the initial impact of the Coronavirus has faded. Our hope is that the window for this uplisting would be at some point between Q4 of this year and Q2 of next year.
The update to our strategy is driven by the advice given from our investment banker community on the uncertainty around the lifecycle of the virus. Therefore there is a possibility we could experience a second wave of it as states continue to loosen their shelter-in guidelines, which would then freeze out IPOs this fall.
In summary, our banking team’s advice is to be extremely opportunistic now as many great companies and brands are for sale or will be for sale over the next six to nine months. The only way to close most of these acquisitions is with cash or liquid stock. Given their concerns over the traditional IPO market, we either need to raise $50m+ in cash, which is highly dilutive or proceed with a direct listing onto the OTC.
We believe that with liquid stock we can accelerate shareholder value in both the short and long term. We are living in a unique time, which has created a lot of disruption to both traditional and DTC consumer brands. This disruption will lead to significant opportunity to acquire and grow these brands on our platform.
We will continue to provide you updates as we progress through this strategy.
Best,Hil Davis CEO
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