Direct Public Offering (DPO)
Definition:
Direct public offerings (DPOs) allow you to sell stock directlyto the public without the registration and reporting requirementsof an initial public offering. DPOs are specifically designed tolet small businesses access the public capital markets with lesscost and complexity than is involved in IPOs.
DPOs typically raise amounts of less than $1 million, but youcan raise up to $25 million with a DPO under certain circumstances.You can also advertise and promote the sale of your own stock ifyou hold a DPO, something other public companies are forbidden todo.
DPOs’ main limitation is the lack of a secondary market forsecurities. That means the stock of a DPO company is illiquid,meaning the ability of shareholders to sell shares on the openmarket is limited and they may have difficulty finding buyers fortheir shares in the event they want to sell. That’s not necessarilybad for you, but it can be a deterrent to investors.
