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Welcome to our FAQ page!
Here you’ll find clear answers about direct listings and how they can unlock your company’s true market value. Explore our FAQs to learn more.
What is a Direct Listing at Nasdaq?
A direct listing enables companies to access the public markets. With a direct listing, existing shareholders sell their shares on the open market, and no additional shares are offered to the public.
How does Nasdaq’s Bookviewer technology support a direct listing?
Nasdaq’s best-in-class technology, the Bookviewer, provides a transparent real-time view of order data. In a direct listing, Nasdaq’s Bookviewer gives the Financial Advisor access to the full order book on their desktop.
The difference between an IPO and Direct Listing?
When a company decides to go public, there are typically existing shareholders including founders, employees, and various early stage investors. Both an IPO and a direct listing enable these investors to cash out. However, in an IPO, there is a lock-up period—typically between 90 to 180 days—in which shareholders are restricted from selling outside of the Initial Public Offering. In a direct listing, there are no lock-up restrictions.
How does the pricing process differ between an IPO and direct listing?
An IPO is priced based on the size and number of orders received at different price levels throughout the roadshow. The lead underwriters typically determine the IPO Price based on this information.
Conversely, a direct listing has a Reference Price, which isn’t the Offering Price, but rather the calculated price of the shares after all the buy and sell orders have been received from broker-dealers. The Reference Price is used to open the stock. Transparency is critical in calculating the right Reference Price and helps reduce the chance of price volatility once the stock opens for trading.
What is the Direct Listing with Capital Raise?
Direct Listing with a capital raise allows a company to go public without the need for an underwriter, which can result in lower costs and a simpler process.
How long will it take to get listed?
This is really dependent on how fast we can move through the stages. Working at maximum speed, this can be achieved within 6 months, but we usually like to advise allowing between 9-12 months.
At what price will the listing start?
The objective is to list at $8 per share, and this would be approved by the SEC at the first stage of the process.
What are the risks?
The main risk is the fact that you don’t actually list or do not have the ability to fully finance the project.
What happens if the stock price goes lower?
Nothing happens except that the value (market cap) of the listed entity would reduce. Any borrowing or credit lines would remain unaffected should this happen.
How does the company gain liquidity?
This would either be through credit lines, which currently offer 20% value per share (interest rates around 4%), or through specialist share purchasers who would purchase shares with a 15% discount plus a 4% share premium.
What is the difference from a SPAC?
A SPAC is a shell company with no dedicated operational model except to aim to purchase a company (no target has been identified, nor is this allowed). You only have 2 years to obtain the target, the majority of the shares/equity are held by the sponsors and advisers, so you lose control. Alongside this, the fees are much higher to operate and to actually list (approx. $1.5m), the legislation and rules are a lot more complex, and they are designed essentially for the advisers to make the most money! A direct listing is quite the opposite.
Do you have an example?
Please review Nano Nuclear Energy Inc: https://www.nasdaq.com/market-activity/stocks/nne.
How can we get the initial 300 subscribers?
We usually recommend starting with family, friends, associates, and employees. Shares will be sold at $1, and the expected listing will be at $8—this is a compelling potential ROI. For simplicity, just think of it as only 700 subscribers at $1,000 each covering your total costs. Please also bear in mind that we have relationships with agencies that specialize in obtaining direct listing subscribers. These agencies will either charge a set fee or take a stock option.
What happens post-listing?
After listing, the aim is to get liquidity into the company (and founders), which can take around 60 days. The objective is to ensure the company continues to move smoothly, a clear marketing communication strategy is in place, and the entity remains compliant at all times. We can assist in all these matters moving forward as your trusted partner.
Do we need to relocate our existing company to the U.S. for a direct listing, or can we establish a new entity?
No relocation is necessary. You can set up a new entity – typically a Delaware C Corporation – for listing purposes only. This approach allows your current operating company to remain in its original jurisdiction. The U.S. entity is used solely to facilitate the public listing on Nasdaq. Any income or transactions can be managed between the U.S. listing company and your existing entity through intercompany agreements, a structure that major global conglomerates like Amazon, Nike, and Microsoft often utilize.
How will Nasdaq evaluate our company for a direct listing if we don’t have established operations in the U.S.?
In a direct listing, Nasdaq and investors focus on your company’s overall market presence and growth strategy, rather than solely on U.S. operations. Your listing documentation should clearly explain that your core business is currently operating from another jurisdiction while using the U.S. market to access public capital and facilitate expansion into North America. This narrative reassures Nasdaq that you are targeting market expansion and liquidity. Moreover, being an operational company with proven performance is highly attractive to investors – especially when early shareholders have an opportunity to benefit from a compelling initial pricing strategy that can offer significant returns.
With limited brand recognition in the U.S., how can we build the necessary market traction for a successful direct listing?
Market demand in a direct listing is driven by effective investor relations and clear communication. Even if your U.S. brand recognition is limited, you can generate interest by proactively engaging with investors through regular press releases, interviews, and market updates. Strategies such as hosting virtual investor roadshows, providing detailed analysis reports, and even offering a modest dividend can create additional appeal. Utilizing your existing social media channels and public relations efforts to showcase your company’s strengths, growth plans, and operational success can also drive investor interest. In essence, consistent and transparent communication post‑listing will help build the necessary traction and support a favourable share price.
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