Small-Cap IPO Strategy: Insights from Peter Goldstein

Jason Kirby (00:01.674) Hey everyone, welcome back to Fundraising Demystify. Today I'm inviting back Peter Goldstein, the expert in the IPO market, also the author of the Entrepreneurs IPO and soon to be author of the Investors IPO.

Peter, welcome back to the show.

Peter Goldstein (00:19.31) Thanks Jason, great to be here again and excited to have another in-depth conversation about the IPO market and all of the complexities that surround that in today's day and age.

Jason Kirby (00:29.578) Yeah. And there's a lot of questions that I have because, we're, talking today at the end of March, you know, so end of Q1 2025, uh, there's been a huge kind of market, uh, scare and kind of like, you know, drop in the last few weeks in the last month or so, uh, IPO markets for everyone's begging for liquidity in the markets. And yet there hasn't been any major activity, but a lot of talk. So to kind of kick things off, you know, being the jerk, the, called the resident IPO expert on our show. I'd be curious to hear your thoughts on kind what your take on the current IPO landscape for 2025.

Peter Goldstein (01:06.178) Yeah, there's no straight and direct like easy answer to that Jason right? These are complicated times and and the optimist because I'm a very forward-looking kind of optimist and very pragmatic but I think that in the the volatility that we're seeing after we get a few successful large IPOs, which there are some teed up right now. We'll see the market open up. You know, we've had a pent-up demand and then the pipeline is very full on the IPO side. and the capital is waiting to be deployed. So what I've seen before and as last time was in 2021 or once the market opened up, there was a significant number of entries into the marketplace. So time will tell. I think that really we need we as we have some we can talk about some big ones that are coming up that are very significant in the tech sector in the AI sector. And when these are anticipated, I P. O. S. Come and they open up and they perform well. you know, then that will really shift the IPO market as we know it today.

Jason Kirby (02:09.224) important is timing for these companies? I imagine that's why they're holding out for so long, but like how much does timing impact a decision to go IPO?

Peter Goldstein (02:18.15) Timing really is critical Jason because there's a number of sensitivities here and and that's the the complexity of an IPO coming in together is that you need to have the market conditions right your underwriter needs to be aligned management needs to be aligned and the board needs to be aligned and so typically the sensitivities are around bringing all that together and let's be honest it's about valuation Right? So, so the demand for the stock, know, IPOs have a limited supply of stock. Every one of them is only issuing so many shares. So then it really comes down to that timing relative to all those factors coming together under one unique timeframe.

Jason Kirby (02:59.646) What do you see behind the scenes right now when it comes to companies looking at going IPO? I know your specialty is more than micro, a small cap, but from an investor sentiment, so the investors that have a bunch of dry powder sitting on the sidelines waiting to see what happens. Are you seeing a lot of companies going on road shows, entertaining, whining, dining these investors right now, or are people still kind of in a holding pattern waiting for better times?

Peter Goldstein (03:21.23) I think what companies are doing preparing, know, that smart management teams understand that it takes time that you can't just roll out an IPO overnight, right? So companies that are even able to file confidentially with the SEC allows them to put together the infrastructure and being what I would call IPO ready. And, you know, I have a great saying, Jason, if you're IPO ready, you're ready for anything in business. So it takes, you know, a very strategic management team to understand all the different stages of being organized around an IPO. And there are regulatory restrictions. don't necessarily just go out and road show. You can't necessarily solicit and announce your IPO unless you're under the certain confines and constructs that are, you know, allowed through the regulations that the SEC provides.

Jason Kirby (04:13.202) I guess from the investor sentiment, what are investors wanting right now? What are you seeing on the investor side?

Peter Goldstein (04:21.822) They want it all. want it and they have the ability to be very picky and choosy about it. So, you know, what is that valuation growth, right? Solid management team and I think overall that it's a company that really is truly positioned properly to bring that together in the open markets with liquidity. And that takes, you know, really kind of that orchestration. Investors have the ability now where they want to know that, let's be very clear about it. Many of the IPO's haven't traded well in the open market. And while there's an overall return, there's a lot of concern there. And so that's why the money is somewhat on the sidelines. And yet that money, Jason, has to move. The money has to come into the market in order to get a return on its investment. So that selection process of bringing it all together is really what the investors are looking for in today's market.

Jason Kirby (05:19.592) Well, it's interesting because I was looking at a recent stat on the secondaries market and I think it was like, went up from like 40 something billion a couple of years ago in total transaction volume, like 140 billion in last year. And to see that kind of uptick is that like, why do you think investors are pouring so much money into secondaries right now?

Peter Goldstein (05:44.246) Well again, if because the money really has to come into the market for the investors to get a return on their investment. It's not if they're not in the venture capital or private equity market and they're investing in liquidity and investing in the public markets and that's the mechanism for their money to get in at a reasonable discount, right? They can always buy in the open market, but it's secondary typically has better terms for the investors than it would if you're buying in the open market. or it has the ability to come into the market knowing that there is a significant event and opportunity for those investors to get a return on their investment. So the secondary market, I think will continue to grow as an alternative to those companies that are already public because those companies need to see capital to continue their growth, right? You know, these companies went public at whatever time frame they did and are able to take advantage of the access to capital, whether it be a debt. you know equity or some structured financing.

Jason Kirby (06:44.584) Yeah, and I think it's a bit of an anomaly what we're seeing is like, I think it was almost like 70 % of all that capital went into just eight companies like SpaceX, OpenAI and things of that sort. And for them, it's basically like being a public company at that point with how much liquidity there is for their stock and it allows them to have full control. When think about the other 20%, 30 % of the secondary's capital being distributed amongst hundreds or thousands of companies, it's a lot less liquid for those guys. And I guess that kind of brings the point of why maybe considering a micro cap or a small cap listing might be more advantageous. give our audience that maybe didn't watch our first episode together, which we'll link in the description below. But what's the difference between like small and micro cap versus kind of these mega behemoths? the deck of corns that are still private.

Peter Goldstein (07:36.194) Yeah, I think the biggest misunderstanding Jason for those that are interested in the small cap and micro cap is that you don't have to be a giant unicorn and BC back company in order to go public. So by definition micro cap is 50 million to 300 million dollar market cap and then from 300 million to a billion a small cap. And these are kind of the future stars, right? These are these are smaller growth companies that are looking to see capital and liquidity at an earlier stage in their development. than they would be if they were bigger PC backed or private equity back company looking for an exit liquidity and that's the sector that I work in. It's much more emerging growth. We have now some interesting stats around that, you know in 2024 Jason 60 % of the IPOs that were coming in a small cap and micro cap or foreign companies. And those are companies seeking access to capital liquidity that are emerging growth companies outside of the United States. So we have this kind of blend of opportunities, not just with emerging growth companies, but in emerging regions of the world that bring the credibility, the regulatory oversight, the transparency by being a public company here in the United States on a senior exchange.

Jason Kirby (08:54.246) So you said 60 % of the micro small cap listings were international companies? Wow.

Peter Goldstein (08:59.768) Correct. Yeah, what would they call foreign private issuers and those foreign private issuers are use a form with the SEC called an F1. So it's a different registration process for the IPO, but the listing ultimately is the same where the share common shares are traded on the open market and in both the NASDAQ and the New York Stock Exchange. So there's NASDAQ capital markets and New York Stock Exchange American.

Jason Kirby (09:03.274) Mm-hmm.

Jason Kirby (09:25.556) So in your experience kind of seeing this landscape, like how are those companies performing? How's the general micro and small cap market performing?

Peter Goldstein (09:35.7) Overall very disappointing how the stocks are trading in the open market. So that's one of the sensitivity items right there are just like in any in any market There's going to be you know, the exceptions to the rule and those that are well prepared They've taken 12 18 24 months to prepare they have the proper infrastructure a proper investor awareness program and they have a growth trajectory and a strategy for entering the public markets Those are the ones that perform well and those are the management teams that we work with and really have seen the distinction. But I think you see it all the way up. You see it micro small mid and large cap that that those characteristics of a successful IPO cut across the board in every sector.

Jason Kirby (10:21.172) So, yeah, a part of every IPO, there's, usually this is like a direct listing, but in most cases there's an IPO and there's initial investors coming in and buying up the IPO shares. Who are these investors that are buying up micro and small cap shares at IPO?

Peter Goldstein (10:41.902) It's a blend Jason you have and I would take it from the bottom you have retail investors and what's changed significantly is that you know 20 to 25 % of the buyers and those IPOs end up being retail based investors and these are accredited investors high net worth you know the the advent now of technology and trading platforms has opened that up to investors to access to these smaller IPOs where they never had it before. And then you have a blend of family offices and kind of special purpose, but you know, fundamental institutional investors. And those are investors and they're hedge fund oriented that are higher risk or at least take a portion of their portfolio that's designated for this higher risk category in the emerging growth sectors.

Jason Kirby (11:31.882) So I guess walk us through some examples of deals that you've worked on that you were there in terms of advising from start to finish and kind of seeing how they perform. What's kind of an interesting story of one of the companies you've worked with?

Peter Goldstein (11:46.776) You know most most of the so I've had a very kind of quiet last year because of the markets and we're selective like many about those that we work with and what we've learned is you know one example of a medtech company and medtech and life science are unique because they're either pre revenue or their early revenue and we also invest in these companies before they go through their IPO. So we're able to fund the company for strategic growth capital prior to its listing. We listed them on the NYSE American and then from there on they've had their journey continue on where they've raised, you know, three times the amount of the initial IPO in the secondary markets to help to support their growth as their revenue and the life science and in this case medical technology comes on board. So what I really look for is a fundamentally good growth story, solid management that understands the capital markets, know, supportive of board to bring that in and then the ability to know that in the next ensuing 12, 18, 24, 36 months, like with this company, they're going to be opening up and developing their market with a strategic rollout. And then this capital Jason becomes really transformational. You know, if you look at some of the bigger anticipated events that are coming out right now and some of the big IPOs that are coming, it's not as much of a transformational event in the small cap and micro cap. These are going to be transformational forms of capital that will take a company from its early stages of growth and accelerated in the next 1824 months. So, you know, we're seeing obviously some of the big ones right like Klarna as an example. If we go back up the food chain Klarna was expected to go out in 2021 and it didn't happen right and it's similar with the company that I just told you we were able to do it because there's smaller amounts of capital when you're talking with evaluation of let's say where's Klarna it was 12 to 15 billion dollars. That's significantly different than we're talking about a hundred and twenty million dollar microcap offering right?

Peter Goldstein (13:49.654) So, you know, these are going to be very interesting bellwethers for the market as we look at the differential between the large cap and the small cap and the micro cap off.

Jason Kirby (14:02.706) And let's just say, know, Clarinac or any these, you know, bigger companies that have had tons of secondary and there's been a lot of liquidity on behind the scenes. when they go public. If they are up into the right, think it's everything's going to, know, Marco will probably rip with it. But if they don't go up into the right and they flatline or they start to tank, you know, do you think that's a direct correlation to the small caps and micro caps? Or do you think there could be some other potential for those companies?

Peter Goldstein (14:36.738) I think there is a correlation. Just generally speaking, know, the IPO performance is going to affect every sector. And obviously, know, data bricks, stripe, Klarna, know, Corweed. These are big names and investors, you know, will will be able to demonstrate their appetite. So you have AI focused, right? You've got technology companies, you know, there's been very strong interest and investor center around around every one of these sectors. So with that substantial interest from investors looking for the growth opportunities and you know, tech and fintech, especially that the performance of these IPOs is going to impact all of the other sectors and in a positive and or potentially negative way. So, you know, we're watching all of those very, very closely because the pipeline is filled and what we've seen Jason once the pipeline opens and and the window is open things move incredibly fast and into the marketplace.

Jason Kirby (15:35.242) No, I think that's going be very exciting. think if any of these big private companies have a successful IPO, everything's just going to rip wide open. Imagine the flood gates will be open and everyone's going to be trying to get in there. Everyone at least has been prepared and has done their diligence in prior. But when it comes to getting these as a founder and a founder mindset, of looking at your options for liquidity, either to fuel growth or for, you know, for existing investors yourself, or wherever to kind of get liquidity. When they're looking at an IPO, obviously they want a great outcome and you can do your best to kind of, you know, do the road show, set the price and hope for the best. But in the event that you go public and you don't really know what's going to happen in the macro market, and that's a risk you take. What's some like words of advice to those founders that might want to know what happens after IPO in terms of the good, bad, and the ugly.

Peter Goldstein (16:38.766) It's really about the long game Jason. You're right. There are options. And IPO was just one of them. You could continue to stay private, know, seek venture, know, growth capital, you know, look at funding from PE or from other sources. And then, of course, you know, there's the optionality and most investors that would take that route are looking for liquidity at some point in time. More companies are staying private right now because they have access to capital and they have access at high valuations with less volatility in their price. So you know there are benefits and their pros and cons obviously going public is not for every CEO. It's an extremely challenging role to be in and a founder to be in that position where you're really in a sense running two companies. have the operating side of your business and then you have the public facing side of your business. And so I actually try to really talk people out of this. We need to know that they're fully focused for the long run if they're looking for short term gains founders and CEOs don't typically take money off the table at the IPO. Investors don't want to see that. So there's a lot of misinformation. When I took my first company public, I thought once I got listed all of my issues and my pot of gold would be waiting for me. Didn't work out that way and it doesn't work out that way in reality. So you know the advice is if you're going to go, be fully ready and be fully prepared and that's a very robust plan.

Jason Kirby (17:51.882) if

Peter Goldstein (18:11.212) have a right team around you, have the right advisors around you, have people who are experienced, not just in the IPO market, but in today's IPO market. because it's different Jason than it was in six months ago, a year ago. You know, there's an old joke in our industry, you know, if you've done two IPOs, you're consider yourself an expert. Well, I like to look at in what timeframe and in what sector and how does that relate to the companies that we're working with? And so when we bring in, you know, a CEO, we spend 12, 18, 24 months working and prepping and educating. for what it's going to be like and then of course there's no certainty. So that's both on the positive and on the challenging side of being in the IPO market. So it's a long run long view perspective that you have to have. where you're not going to be looking at the stock ticker every day and focused on the volatility in your stock, but you're going to be understanding that this is going to give you access to more capital, right? Credibility, visibility, liquidity, and that's got the benefits that far outweigh the risks and of course in my opinion because that's the sector that I'm focused on.

Jason Kirby (19:19.178) No, I think that's an interesting perspective. you kind of bring it to this point of like, just because you went public doesn't mean it's payday for everyone. Because one, who knows how to stop performance with two, there's typically these things called lockup periods. what do you typically see as best practices for lockup periods, you know, currently in this market right now?

Peter Goldstein (19:37.934) So there's two stages and I think it's also important for the investors that are listening to understand if they're if they're investing in an IPO. The first one is a six-month timeframe and prior investors to the IPO are typically locked up for a minimum of six months. And when those lockups come off and this is what's interesting for investors, you want to be tracking that time frame because there's likely to be a sell-off then there's certainly more shares that are available to be sold and many of those investors Jason have been in this company for a very very long time and so they have their own sentiment around wanting to sell. and the ability to sell after that first benchmark, which is six months. The second one comes at one year and insiders founders are often locked up for at least one year from the IPO. And so that's the second tranche of course insiders have to record any sales. So you don't know if that's happening. But the really key markers there are watching what happens with the stock after the lockups come off during that six month and 12 month time frame.

Jason Kirby (20:50.154) So it's important for founders to know it's like you have to continue to operate this business. Cause I know plenty of stories, especially 2021 founders took their companies public, but had the one year lockup and lost 50, 75%, 80 % of the value by the time the lockup was over and they were able to sell their shares. And it was a meaningful negative impact. Uh, you know, for now that was more macro than, they probably, the valuation is probably too high to begin with and macro market and things of that sort. But, um,

Peter Goldstein (21:10.989) Yes.

Jason Kirby (21:20.498) Yeah. How important is it for founders to think about pricing? everyone wants the highest valuation, but is it a valuation they can live up to? What are your thoughts on that?

Peter Goldstein (21:30.722) Yeah, I'm a big believer Jason the the markets really going to set your valuation for you and and what I mean by that is when your IPO comes out to market typically there's a range and and demand if it's strong will have your IPO done at the higher range if it's soft of course in the way of demand from investors and your IPO is likely to price at the lower end of the range. And so that takes a lot of work to understand who are your comps right comparable companies in your sector in the marketplace. How are those performing? Right? What is that kind of bundle look like in the open market and then to be able to set a realistic valuation and I think honestly one of the reasons why more companies aren't coming is because they've gotten very high valuations in their private life and they don't want to do necessarily a down round or around that would be below the last valuation. And so if you go out too high, then of course, you're going to have a lot of pressure on your stock and then you have the herd mentality when when stock is pressured and stock tends to go down then people unfortunately tend to want to sell and jump onto that kind of herd mentality. So valuation becomes a very very critical piece of your IPO and of course, know that has to be matched up not just at the time of the IPO but with the prior rounds of financing and being able to build in a price point that's attractive to bring strong demand. If the demand is there on the IPO, then you have a higher likelihood of buying in the open market with an uptick. the demand is soft, then obviously you run the risk, as you said, of the price, you know, getting under pressure and then the valuation being eroded for all of the stakeholders.

Jason Kirby (23:16.202) So for founders out there that want to consider this, what would be some of the checkboxes that you would look for? in a company. you mentioned some of the management team and share, but what are some of the hard concrete, like either stats, like you need to be growing X year over year. need to be, cause it has to be marketable. Like anyone can fill out documents and file for an IPO, but at end of the day, there's going to be buyers on the other side that think you're attractive. So what do founders need to consider when taking a company public?

Peter Goldstein (23:53.836) If you want a growth marker for me, it's 30 % minimum year-over-year growth and not just the company's growth but inside of a sector that has a large addressable market and is growing itself and that could be niche. It could be geographic. It could be macro. But you want to really align, you know, the company's growth inside of a growing sector. Those are critical markers for us. And you don't want to take out a company obviously that doesn't have that trajectory over the next 12, 18, 24, 36 months. You know, beyond that, Jason, no one knows what's going to happen, you know, in this complex market. But I look at three years and three years and then we work backwards from where would we be then into now and look at the assumptions that are made to be able to support You know those growth projections and and the strategy organic and it could be inorganic meaning that that could include an M &A Which is really a robust opportunity to grow your business in organically So the strategy in order for just not just where your growth has been historically but what it's going to be Coming up in the next 12 18 24 36 to keep on that growth of a 30 to 40 percent, you know annualized

Jason Kirby (25:09.802) So having a clear growth strategy to maintain that 30 % year of year growth, whether it's growth buyout strategy, buying up competitors or consolidating or whatever it might be, or just having a clear definitive sales plan and growing market. But I guess from like a revenue or EBITDA, are there certain kind of baselines that you would kind of encourage founders not to really even consider an IPO until they hit certain benchmarks there?

Peter Goldstein (25:37.038) I think it's more about cash burn Jason than it is about revenue and and even a and and you know tech companies and other companies that are coming out. You know, it's really critical to understand your burn rate, you know in our sector small cap microcap. lot of these companies are not yet profitable, but that happens all the way up the food chain and and so, you know, I'm more focused than on companies capitalization its strength on its balance sheet.

Jason Kirby (25:41.898) It's really interesting.

Peter Goldstein (26:03.65) both coming into the IPO and once the company is further funded.

Jason Kirby (26:10.122) So you're saying like companies could be like 50K a month burn rate and 5 million revenue and go public. Would you advise that or would you be like, no, wait until you're like 25 million, 50 million in revenue.

Peter Goldstein (26:22.22) Well, you know, again, it's there's a market cap measure here, right? So, you know, if you're putting a $50 million evaluation on a company, there has to be enough of a multiple to support that in the way of revenue.

Jason Kirby (26:33.31) Gotcha.

Peter Goldstein (26:35.158) So for us 10 million in revenue is typically a floor and then up there are companies that are below that that could be life science. It could be medtech. It could be something that needs time to develop, you know, the intellectual property and to be able to bring that out to market but any anything realistically and there are some new rules that have come out Jason that be interesting to share with you. So Nasdaq has recently changed and has SEC approval to have a minimum capitalization in the floatation of shares.

Jason Kirby (26:47.37) Yeah.

Peter Goldstein (27:06.031) 1515 million dollars. So that sounds small in the big world of IPOs, but there were a lot of number of companies to your point that were smaller earlier stage that had a bigger cash burn that were raising less money than that and entering into the markets. And then so now there are new regulatory guidelines that have put a floor to the IPOs at 15 million dollars and above which went away after 2021 with basically underwriters and companies getting creative about ways to enter the market and unfortunately that creativity really didn't work very well in the sense that these were thinly capitalized companies with a high burn rate and they didn't have the revenue streams and the institutional support to be able to maintain, you know that stability that's needed in the open markets.

Jason Kirby (27:56.682) What do you think drove that? you think that's like founders leading that or is that like advisors trying to make, know, advisors, investors trying to make fees and trying to make a quick buck as opposed to what's actually materially valuable for the company long-term.

Peter Goldstein (28:10.432) All the above Jason, know, it's you know, it's Wall Street. It's it's in the micro cap and small cap markets, especially are very opportunistic in a sense. And I tried to bring different leadership and integrity to that so that, know, we're really selective about being able to protect all of the parties involved, including the founders. But nobody really wins maybe outside of the people that get paid in transactional fees. if a company enters the market and it doesn't perform well, isn't really organized properly, isn't structured, isn't educated about what it is to be a good solid corporate citizen as a public company. That sustainability is one again that we've seen time over time. You can't rush into the market. You can't be under finance. You need time to prepare you time to make sure your management is ready. Your board is supporting that you have that growth trajectory and you know one of the things I love about what I do is there's any not one particular area. It's all of this from a 360 degree perspective. And yes, know, Wall Street is built on greed. So, FAA financial advisors, other participants in the sector are looking to bring transactions together because that's how they make their money. I like to look at it very differently, which is how is this public company going to operate in the open market? And have they taken the time to prepare, to organize and to set themselves up for success in the open market?

Jason Kirby (29:43.892) So I think it'd be good for us to educate founders on, you know, kind of these, these two different paths of, cause venture has just become the de facto path for so many companies. But there's a certain point where, I think founders really need to consider this, where they might, because 30 % year over year, year over year growth is no longer venture sexy in most cases. and at that stage, say you're a great company, you're doing well, but you're not. one X two X year over year growth, uh, in a hot, sexy category. Uh, and maybe you raised venture previously. So I know a lot of companies that have some pretty high pref stack. So for the audience that doesn't know what a pref stack is, it's when you have, let's just say you raised 40 million on a one X like breath, like you have to clear 40 million. And then there's disbursements to, um, the rest of the investors. If there's like an M and a activity. or something of the sort. So when these companies that have these large prep stacks that are no longer going to be able to raise follow on funding from traditional venture, like how should they look at this path and what would be the net benefits of considering going public versus, you know, trying to chase VC or maybe growth equity?

Peter Goldstein (31:03.338) It just starts with access to capital. You have a much broader pool of investors and investor base. And one of things that I would focus on is control. You just mentioned in these prep stacks that the prior investors have a significant amount of control over the entrepreneur and the founder and the management teams and how they're able to navigate. And it diminishes that options. So one of the tools that is used in these more companies going public is to separate the shares so that the founders and the management team can still have voting control. And that gives them the ability to access capital without significant dilution while they're opening up the pool to both institutional debt debt and institutional equity participants. And so it really this becomes you know choosing your lane Jason right. and looking at the opening up and really the other critical component that I think most founders should consider is using that stock for other purposes. Right? So that's to be able to reward your employees to attract employees reward them your stakeholders, right? The credibility, the value that comes out of the intangibles. So you have your quantitative and the qualitative and I think the qualitative is often overlooked. as another benefit from being publicly listed.

Jason Kirby (32:27.07) So like the kind of recap, would say for founders that are considering going public, like the prep stack effectively gets eliminated. You know, so when you go public, correct, like there's, there's no retention of that prep stack. So maybe you over raise at a too high evaluation, you might take a haircut evaluation, but you, you eliminate that prep stack, which can make a material impact and gives you more, more control potentially over the board and voting control. Cause in most cases, those investors would probably move on that, you know, were previously, the private side and new public investors would step in. that, is that a fair assumption?

Peter Goldstein (33:03.95) 100 % so not only do you remove it, but it gives you a whole new world of optionality And and then you have the ability to utilize all of those tools that we discussed

Jason Kirby (33:14.686) Yeah. Especially for like growth buyouts, we're working with a company now where, you know, the idea of going public makes a lot of sense because, you know, they're a strong number three in their market, but to kind of get to number two or number one, they want to consolidate, be the first to start consolidating the market beneath them. And as a private company, you know, you're kind of coming out with these phantom shares like, yeah, well, you know, come in with this. And it's just like, I see so many people on the sell side that get those offers and turn them down because, know, They're usually overinflated valuations. There's no way to really know what's going to happen. But if they get an offer from a public company, then they can actually count their chips and be like, okay, like that's actually how much these shares are worth right now in the market. Here's how they've been performing. Okay, this is a serious offer that we can consider if they're offering stock. And it makes a material difference in &A discussions if that's a particular path for a company.

Peter Goldstein (34:05.496) Couldn't agree more and I think it's often overlooked. know, you're using stock as a currency now in addition to the capital and then of course, there's additional capital just for acquisitions. There are a number of investors that you know support a roll-up strategy or an &A growth strategy that would really then give you the ability to have access to being able to buy those companies with stock right with a blend of equity and with that. That's how I took my first company to Nasdaq was we did a roll-up to roll up after roll up and and for those companies that want to grow their market share I don't know of any faster way to go to do that than to build a well capitalized &A strategy along with utilizing shares with a mark to market so the big difference there of course is you have fluctuation but you have the ability to do mark to market when you're utilizing those shares as currency in the &A strategy

Jason Kirby (35:00.318) Gotcha. So just for fun, could you tell the audience a little bit about your, I know it's a little while back now when you do that strategy, but kind of walk us through what the company was, why you decided that growth buyout strategy was a good growth strategy for you guys and kind of how'd you guys go about finding that.

Peter Goldstein (35:20.174) So we were in the staffing sector and what I was looking for and this is quite some time ago. So I'm going to date myself but but really Jason what it was was finding smaller fragmented space that could be aggregated into a much larger sector and that exists in many many different spaces around the world and industry sectors. We chose that because we had a foundational company that was the core that we started with. But when we began that journey, we didn't have any organic operations. And this is part of what the journey was like when we wanted to start with, we were brought an opportunity that we wanted to buy. And then we saw and did our homework and diligence on the sector. And what we found were very, very profitable. but small fragmented companies that would hit their ceiling in the 5, 8, 10 million dollar range again were small cap and micro cap. But then we begin aggregating those one by one and it was kind of high-end staffing, white collar staffing if you will, cyber, accounting were our focus around you the areas that we began where we were just it was just an arbitrage play. Right? We're buying them, let's say back then, you know, four to five X on a multiple and immediately we're getting a double and then growing those and aggregating where that double increase in value would turn into three, four, five X on return as a total bundle. And it was a great exercise. Taught me obviously the benefits of being able to use a blend. And what we did, I'll just give you my formula, was a third stock, a third debt. and a third equity and the management teams of the target acquisition had to stay on for at least three years. So we knew we were maintaining the human capital along with the ability to grow and aggregate those through an &A strategy.

Jason Kirby (37:23.722) I wouldn't say equity was it so you did third stock of your stock and then you raised the third of it in debt and then you did third equity that was cash coming out off your balance sheet or from okay gotcha good good strategy you know it's kind of safe safe enough kind of like blends blends it all

Peter Goldstein (37:36.334) Correct. Yeah.

Jason Kirby (37:45.47) Kind of what was the outcome? Like you went through that path, you executed on that strategy. What was kind of the outcome for you at the end?

Peter Goldstein (37:54.552) For me, founder, chairman, we brought in much more experienced management than I was in the sector who took over and then I took my exit. So it was a good outcome. Everybody won and that's what I obviously look for in the transactions that I'm involved in. When you have these small private companies who don't have an exit strategy, they don't have a succession plan. This is like a really great way and I think there's more and more of those right now given the boomers who didn't plan on well organized and aren't big enough to have the big VC backed exits or the PE exits. And so those are the companies that and I'm an entrepreneur at heart Jason. So I really love working with you know people who have dedicated their lives and careers and their identity around building a business that then have an alternate strategy that they didn't have before.

Jason Kirby (38:49.002) I appreciate that Peter. I think there's a pretty valuable insights in terms of what we're looking into in turn current markets as well as just some common good advice for founders taking a consideration for going public. Peter, can you share a little bit more about the entrepreneur's IPO and your new book coming out, the Investor's IPO?

Peter Goldstein (39:09.486) So the entrepreneurs IPO is a lot of what we've kind of still talked about here today. It's a go-to on yeah, step-by-step. Thank you for the plug for the shameless plug, but it really is there's there's when I took my company public. didn't have any place to go to to give me the knowledge that's practical and actionable.

Jason Kirby (39:19.752) good luck.

Peter Goldstein (39:31.862) to enter into the public markets. Of course, I could talk to a lawyer, I could talk to a banker, you know, I could talk to my auditor, but they weren't really giving me the business counsel and the knowledge base. So during COVID, I decided to write the book and put it out really designed for a small cap micro cap entrepreneurs and founders. And what I've learned since is that, you know, two things. One is that any founder, CEO, entrepreneur can benefit from an IPO organized mindset. Meaning if you put the state private and you never want to do an IPO, there's value to you when you're running your organizations with the controls and the systems and the accountability that comes to your stakeholders. So I think it's a good read for anybody, even if you're not considering an IPO. And then separately, what I realized is that IPOs are have a lot of mystique around them, a lot of of kind of smoke and mirrors. and they're largely misunderstood. And so the bigger pool of opportunity comes in those investors who are interested in investing in IPOs. So I decided to go about taking and informing investors on what it is to get access, how to look at IPOs, how to understand them, how to really look at the process more from the investor filter versus the entrepreneur's filter.

Jason Kirby (40:48.771) And that comes out in July, you said?

Peter Goldstein (40:51.54) out in July to be released you know July 9th I'll be in Singapore and we're releasing the book to a large audience of investors at that time happy to share it with you when the time is right.

Jason Kirby (41:02.347) Nah, I'd be happy to read it. Enjoy the first book. It is just a straight to the point, like here's what you need to be aware of, here's what you got to do. Not a lot of fluff, not a lot of extra stuff. It's pretty short to the point, so I appreciate that. And then for founders that are interested in maybe getting in touch with you, either to talk further about the consideration of IPO or just the public markets in general, what would be the best way for them to learn more about you and get in touch?

Peter Goldstein (41:28.94) Best and easiest to reach me on LinkedIn. I'm quite active. I put out a lot of information around the IPO market around the capital markets around entrepreneurship because I'm very passionate in helping and assisting entrepreneurs in their journey. So just connect with me on LinkedIn. Feel free to send me a message and I'm happy to chat with just about anybody about the topic.

Jason Kirby (41:48.97) Awesome. I really appreciate it, Peter. Thanks again for being on the show.

Peter Goldstein (41:52.472) Thanks for having me, Jason.

Jason Kirby (41:54.858) Alright, I'll keep it... I'll go ahead and kill the recording right now.