SOURCE: Xpert Financial

Xpert Financial

April 21, 2011 07:04 ET

Xpert Financial Improves Company Control Over Capital Raising and Valuations

SAN MATEO, CA--(Marketwire - Apr 21, 2011) - Xpert Financial, Inc. today announced new term sheet and valuation controls for private companies seeking to raise capital from private market investors. The company controls are part of Xpert Financial's private offerings, known as Xpert Private Offerings (or XPOs), which allow private companies and their shareholders to list primary and secondary shares, respectively, for purchase by investors that are pre-approved by the company.

"Over the past two years, in conjunction with developing our electronic capital raising and trading platform, we worked closely with investors and high-growth private companies to create a standardized set of qualified information that accelerates the investment decision process from two-to-four months down to two weeks," said Thomas Foley, CEO, Xpert Financial. "With an increasing number of QIBs and other sophisticated investors looking to private growth companies for the returns they once found in public growth equities, the time is right to provide companies with the controls they need to manage their interactions with sophisticated investors."

As part of a primary XPO, the listing company sets the terms under which it will sell its shares as part of the offering. This includes establishing a minimum valuation for the company, choosing what type of stock it will issue (common or preferred), how many shares it will sell and what rights those shares will contain. This represents a significant departure from current industry practices, wherein an investment bank (in the case of a private placement) or venture capital firm establishes the company's valuation and sets the terms of the offering. In this way, an XPO enables private companies to retain greater control over their shares and their futures.

The XPO term sheet offers the listing company with a number of options for managing its shareholder base. For example, shares on Xpert ATS are auctioned in company-defined "lots." Setting the number of shares appropriately for each lot can help control the number of shareholders, thereby helping to ensure that companies do not exceed the 499-shareholder limit, which is the SEC's threshold for reporting. Or, companies may want to put a cap on the number of different entities that can buy shares in an offering in order to reduce overhead when dealing with shareholders. Alternatively, to help prevent an undesirable concentration of ownership, a company may set a maximum on the number of lots that a bidder can place bids on.

In addition to establishing a valuation and share specifications, the listing company uses the term sheet to set the offering's opening and closing dates, the auction type and provisions for an undersell at the auction. This latter provision helps mitigate the potential uncertainty that the company's valuation entails by enabling the company to accept an offering that is undersold (i.e., not all of the company's shares attracted acceptable bids) by any percentage up to 25 percent. The company must include the undersell provision -- including the percentage of undersell it is willing to accept -- in the term sheet prior to the auction.

Once completed, the term sheet becomes the basis for generating the company's offering documents, which are the actual legal documents that will effectuate the sale after the completion of the auction. These typically include the stock purchase agreement, voting agreement, investor's rights agreement and right-of-first-refusal and co-sale agreement. Some details within these documents will be contingent on the sale; as such, the listing company must agree to allow Xpert to fill in these details as part of Xpert's proprietary auto-execution and e-signature function. Along with the term sheet and offering documents, the listing company must also provide Xpert with all legal documents that govern their outstanding shares.

Xpert Term Sheet Elements

  • Company valuation
  • Number and type of shares
  • Lot size
  • Auction type
  • Offering open/close dates
  • Undersell provision
  • Other stipulations/restrictions

About Xpert Financial
From its inception in 2009, Xpert Financial has focused its efforts on creating an electronic platform that benefits both companies and investors in the private securities market. The company's core product, Xpert ATS, is a fully-electronic capital raising and trading platform built exclusively for private company securities. It is operated by Xpert Securities, Inc., a broker-dealer subsidiary of Xpert Financial and a member of FINRA. Xpert ATS supports both primary offerings and secondary trading of private company shares, all under the control of the issuing company. Private companies, qualified institutional buyers and accredited investors that are interested in more information may pre-register at

There can be no guarantee that the Xpert ATS trading platform will perform in the manner desired. Companies available for investment through the trading platform are not subject to the regulatory scrutiny required of publicly traded companies. Consequently, information upon which to make an informed investment decision may not be readily available.

Contact Information

  • Private Company and Investor Contact:
    Nick Nolan
    Xpert Financial
    Email Contact

    Media Contact:
    Tenor Communications
    Email Contact