Going public can help companies raise vast sums of money in exchange for ownership of the actual company going public–through the sale of its equity securities. The only trouble is that the initial offering of these securities to the public, which is known as the initial public offering (IPO), can be quite complicated.
Luckily, there are certain steps companies can take together with securities law firms and their IPO attorneys to insure that that every stage of the initial public offering process goes successfully. Here are just a few.
Choosing the right underwriters can be a crucial part of having a successful offering. These professionals are the ones who are in charge of buying and selling securities to the public. They also investigate the companies going public to verify the financial info they provide to investors. Securities law firms advise companies going public to choose underwriters months in advance.
In order to go public, a business must first file a registration statement to the U.S. Securities and Exchange Commission, the SEC, which contains detailed info about the company’s financial history, the offering itself, and the company’s future. This document eventually becomes the preliminary prospectus, a legal document that explains the securities offered to the public. Once the necessary amendments are made to the preliminary prospectus, it becomes the official prospectus, which, according to securities law firms, the public can use to determine whether or not they want to invest.
After potential investors receive the official prospectus, the IPO is declared effective once the stock market closes. The securities will be available for purchase the next day.
Going public can be a terrific idea. Consider the fact that the U.S. money market funds hold more than $3 trillion, that the financial industry increased IPO proceeds by 82% over 2013, and that 23% more IPOs were completed the following year. Basically, going public can help investors, corporations, municipalities and the overall economy.
Companies just need to be sure that they’re working with competent securities law firms in order to make sure the complicated process is gone through correctly, so that the IPO goes off without a hitch.