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Cannabis Pre-IPO Financial Information

Making sure that your private books are clean and audited is of paramount necessity when going public. Our team will assist with technical accounting memos and SEC-compliant interim information. Beyond that, we help your team prepare EPS calculations and segment disclosures, and provide the help you need to complete an audit of your most recent period(s) audit and give interim reviews.

definition

What is pre-IPO placement?

A pre-initial public offering (IPO) placement is a private sale of large blocks of shares before a stock is listed on a public exchange. The buyers are typically private equity firms, hedge funds, and other institutions willing to buy large stakes in the firm. Due to the size of the investments being made and the risks involved, the buyers in a pre-IPO placement usually get a discount from the price stated in the prospective for the IPO.

raising money

How do you value Pre-IPO stock?

In the cannabis industry, it is often difficult to raise money. The money will slowly diminish if the company only has private investors. There is a bigger pool of money when raising publicly because way more people become involved. Cannabis companies trade at a really good relation; for example, a company might have $10 million in revenues, but trade at a multiple that’s way higher, like $100 million. The value of a publicly traded company is divided by revenues. Once you complete a valuation, this gives more investors an opportunity to come in and see the financials. Public trading also allows shareholders to liquidate some of their stock. For instance, if you are an owner or investor of a privately traded company, your stock is not really liquid. There are lots of hoops to go through. If you’re publicly traded, you can easily trade the shares without jumping through these hoops. This also benefits employees if they have stock options. It allows them to liquidate their stock and get money from it.