How to Implement an IPO Strategy

The lure of becoming a public entity can be strong due to the positive impact it can have on the image, promotion and finances of a company. However, before offering shares to the general public, a company must have a solid foundation, where it is fully aware of its competitive standing in the specified industry, and recognize its own growth potential. The transition will require you to share your company information with the world and ensure that all laws and regulations are met in accordance with the Securities and Exchange Commission.

Instructions

  • 1

    Considerations

    The decision of transforming your business entity must come after thoughtful consideration. Weighing the pros and cons of your business must be the starting point, where you are able to question the motive behind your move. Raising capital through a successful public offering can boost your company’s ability to expand business and acquire other businesses, hire experienced staff, invest in new technology, remain ahead in the related industry, and reward oneself (in this case owners). Moreover, it provides a real boost to the company profile where its products and services are recognized worldwide.

    On the flipside, the company will now have to share added information with the general public, meet all necessary SEC requirements, contend with internal threats and deal with negative publicity.

    Therefore before implementing the strategy it is essential that you go over the fine prints which make the final decision an easy one to make.

  • 2

    Meeting requirements

    After the events of 2008, where the IPO market hit a substantial low, it is essential that you meet certain requirements. Trading in the New York exchange or NASDAQ Global Market will require companies to show profitable pre-tax earnings (in millions of dollars) over the past three years. While this can be achieved for large companies, smaller businesses looking to raise capital through Public Offerings must ensure that they have a large enough market cap where their stocks are traded easily.

  • 3

    Initiating the process

    The process of filing the IPO will take six to eight months. Here you must have the right personnel on board who have the experience and strength to execute a winning strategy.  Hire an investment bank for underwriting purposes and draft an initial prospectus, keeping SEC in the loop. Once being approved, market the IPO extensively by organizing a road show where you will be meeting and giving presentations to potential clients. Keeping the market position in mind, set up an IPO date and start your life as a public entity.

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