Take Away from FinFair – Reg A+ Liquidity and a Secondary Market

During our visit to FinFair in New York City we were able to speak with many of the early adopters in the Reg A+ industry.  There were many topics that were covered and discussed both in the panel presentations and during casual conversations during the breaks which we will cover in a series of posts.The third of five topics we are covering is about Reg A+ liquidity in the secondary markets.If you speak with any professional service provider in the capital markets, you will likely hear most of them say, “why raise money through Reg A+ when you can use Reg D, it’s cheaper, easier, and you can raise a significant amount of money.”  Actually most those assertions about Reg D are correct.  However, what Reg D fails to do, is give shareholders access to secondary markets.If you are a business owner and conduct a Reg D offering, you will likely have a majority stake of shares in the Company.  You may be rich on paper, but those shares have no real value until they are sold and proceeds are realized.  The problem with Reg D with and holding shares of private companies is that there is no liquidity in the stock.  How do you sell the stock to take money out?  You have to find someone willing to buy it from you personally.  That person has to be an accredited investor.  There is little to no liquidity.Reg A+ on the other hand, although more expensive to implement, has a higher limit of funds that can be raised, thereby reducing the fees as a percentage of money raised, and it provides owners of stock the liquidity to realize the value of that stock.Reg A+ shares are freely tradable, and when registered with the OTC Markets, the shares can be publically traded amongst anyone, accredited and unaccredited.  This means you don’t have to know the person that buys the stock, you just need a willing buyer and seller.  That is much easier to do and will allow business owners and early investors to realize proceeds from their investments more expediently.