The NASDAQ is the second-largest stock exchange by market cap in the world. As an American exchange, it has listed over 3,100 companies with average daily share trading volume at over two billion. NASDAQ has handled more IPOs than any other exchange. Since 2000, NASDAQ boasts over 1,000 Initial Public Offerings. What follows is a brief description of what NASDAQ is and what it takes to be listed on that exchange.
It’s an acronym for National Association of Securities Dealers Automated Quotations.
To be listed on the NASDAQ exchange and reporting system, the following requirements:
It has been rumored number of pushers for reverse mergers tout the ability of a company now listed on the Over the Counter (OTC) exchanges can “graduate” to NASDAQ or the NYSE. This is certainly possible and many salespeople will reference some big names like Turner Broadcasting, Occidental Petroleum or Berkshire Hathaway.
In a former life, when the NASDAQ was not as big as it is today, this was certainly more prevalent, but each of these companies would now be a wide exception to the rule. Unfortunately, transitioning to larger exchanges is much more difficult than many micro-cap business owners and management assume. However, it’s not out of reach as the numbers above showcase. Your best bet for being able to step up to the next exchange: build a good business that is investable. That is, focus on the business and not the financial engineering behind the business. If you have a great business, the money will flow in, the stock price will increase and the transition will be more than natural. The most common problem are the puffer fishes. They’re those that tout how great their business is, but who may have unrealistic expectations on their abilities and the growth within the market.
For those confident in their business and its growth trajectory, going public and then later graduating can be a viable option to a traditional IPO, but warrants a deeper dive as there are reasons an IPO may actually play better for emerging growth companies. As always, the best answer is “it depends.”
If you’re looking to invest in non-traditional, off-market opportunities, please get in touch with us!