Taking a Company Public

When you are in a leadership position for a company, you will be confronted with many challenging decisions, but one of the biggest actions a leader or leaders of a company can make is to take their company public. There are six steps a company should perform to take their company public which require clear thinking and decisive action.

Step 1: Evaluate Whether Going Public is the Best Move for Your Company

If a company goes public, it immediately enhances their image as they become known to investors, and excitement usually attaches to the company as it is a recognized that its assets are considerable. There are many benefits that come with taking a company public as the move often increases the visibility of the company which is very helpful in raising funds. However, there are drawbacks to going public with a company like it must be willing to accept that at times, their decision-making process will be slowed considerably because a public company must report to shareholders, and when people buy equity into a company they often want to know precisely how their money is being used. Thus, the first step to taking a company public is making sure the decision to do aligns with the future goals of your company. Once the decision is made to go public, the company needs to find an underwriter.

Step 2: Hire an Investment Bank to Act as the Underwriter to the Company

A company that is going public, needs a business that will act as the conduit between the company wanting to go public, and the public to whom you will be offering your stock. This business that a company needs to hire to be the link to the public is an investment bank. As the underwriter, the investment bank will help create a plan to acquire the money needed to go public.

Step 3: Start the SEC Registration Process

For a company to go public, it must open itself up for examination by the SEC, and this is a process that is rigorous and requires the completion of much paperwork. The registration process at a minimum requires the submission of a prospectus, a registration form, and the revealing of any risks it will faced which include the market for the company’s stock and the economic environment. The registration process is cumbersome but once completed, a company can then move forward with the filing of the registration so your company can begin selling its stock.

Step 4: File SEC Registration Statement and Await Approval

When your company files the registration statement with the SEC, it will be reviewed, and if it is approved or not, the company will be informed in writing. The moment the SEC registration is approved, your company can go on the road and start introducing potential investors to the company.

Step 5: Introduce Your Company to Potential Investors & Establish Stock Price

Once your company is registered with the SEC, the mangers of your company need to start travelling to various cities and have information sessions with potential investors to make them aware of your company, the benefits it offers, and what will be the possible price of the stock. The most important aspect of this process is you and your team of executives that need to ignite interest in your company with the use of your prospectuses. At the end of the road show, your company will likely have enough feedback from potential investors to be able to establish a final price for the initial offering on the stock market.

Step 6: Make Your Company Public with Initial Offering

The final step of talking your company public includes listing it on the New York Stock Exchange (NYSE) by completing the application and paying the listing and annual fees. Once this step is completed, your listing becomes public and your company is now a publicly traded stock. Taking a company public is a long process but for many companies, it is worth the investment in time as it can help raise funds for projects that can significantly enhance the value and status of the company as many people consider it a move that identifies a company as a major force in its industry.

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