SOURCE: Xpert Financial

Xpert Financial

October 06, 2011 12:09 ET

Xpert Financial Puts Private Companies in Control of Secondary Market for Their Shares

Only Simple Amendments to Company Documents Are Required

SAN MATEO, CA--(Marketwire - Oct 6, 2011) - Xpert Financial, Inc. today gave private companies a simple solution to regain control of their shares in the existing secondary markets. Currently, trading of private company stock is often initiated without the company's knowledge or consent on various secondary markets, often forcing the company to use precious growth capital to buy-back shares or forego control of its shares and yield to new shareholders who may not be aligned with management's long-term goals and strategy.

Prior to publicizing or making the tools public, Xpert Financial underwent the process to implement the tools in order to reflect the new realities of other secondary markets. Private companies wishing to avoid complications from intermediaries soliciting former employees or misaligned investors may contact Xpert Financial for more information at www.xpertfinancial.com.

"We took this preemptive action to ensure that we maintain control over the trading of our shares, the valuation of our primary offerings, and the make-up of our investor and shareholder base," said Thomas Foley, CEO of Xpert Financial. "With the trading on different secondary markets of private company securities rapidly taking off, we believe that CEOs and boards of directors will see the value here and make these changes to protect and grow their companies."

The suggested tools can protect against unwanted transfers of both existing and future shareholders without the transactions occurring on a company approved alternative trading system, such as Xpert ATS from Xpert Financial, that provides the company with explicit control over access to company provided information, how shares are transferred and who can ultimately purchase the shares. Enacting these tools will enable private companies to re-capture control of their capitalization table, align investors with the company's long-term objectives, and help prevent required registration with the SEC by unwillingly exceeding 499 shareholders.

"In the past few years, transactions in the existing secondary markets have shown how vulnerable private companies can be to the buffeting effects of unbridled investor demand, and has led to several of the highest profile private companies placing a blanket prohibition on the secondary selling of their shares," said Foley. "Our goal is educate private companies, giving them the tools to regain control of both the primary and secondary markets for their shares, all while producing a more transparent market for private company securities. Existing secondary markets and bulletin boards, we believe, cannot provide the security, transparency or control that private companies deserve and that sophisticated investors expect."

Right of First Refusal Not the Answer

With existing phone-based brokerage and bulletin board solutions, the only recourse for a private company to control unwanted secondary trading of its stock is to execute the right of first refusal (or ROFR) provided for in the company's charter documents and financing agreements. However, doing this for each attempted transaction takes up valuable company time and resources and can be extremely costly for the company to execute since the ROFR is merely a stock buyback, requiring the company to pay "market" price for its own shares.

How Xpert Financial Can Help
With Xpert Financial, the needs of private companies always come first. Xpert Financial, through its wholly owned subsidiary, Xpert Securities, member FINRA, operates a fully-electronic alternative trading system regulated by the Securities and Exchange Commission that was built specifically for private company securities. Called Xpert ATS, this trading platform supports both primary capital raises and the secondary trading of private company shares. With Xpert ATS, each company authorizes the investors that can view its information and purchase its shares. Xpert ATS also enables private companies to set a minimum number of shares that can be bought on the platform by a new investor, providing additional control over a company's shareholder count. By implementing simple legal tools developed by Xpert Financial, and by requiring that company shares be traded only on Xpert ATS, the company can regain control over who is able to purchase their shares, as well as the total number of shareholders in the company.

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 member 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 www.xpertfinancial.com.

Disclaimer
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
    Director
    Xpert Financial
    650.375.2424
    Email Contact

    Media Contact:
    Tenor Communications
    Email Contact
    650.200.8233