What is an Initial Public Offering ``IPO``?

An IPO provides your private company with access to public growth capital. An IPO starts with filing a Registration Statement know as an S-1 with the SEC. This requires hiring an SEC Attorney and a PCAOB Auditor. You are required to have at least a 2 year audit and once your company is public you are required to file quarterly reports known as a 10Q and a yearly Audited report known as a 10K.

You will then need an Underwriter who is a Broker Dealer licensed by FINRA. The Underwriter may decide to include other Broker Dealers in your Offering which is known as a Selling Group. The Selling Group sells the company’s IPO shares to their clients who are Institutional, Family Office and Accredited Investors.

The company files a public S-1 Registration Statement before the IPO and then there is a 15 day Quiet Period where the company and Underwriter cannot market the IPO to investors. After the Quiet Period the Underwriter starts Roadshows to potential Selling Group members and investors. Once the Underwriter has the desired level of interest, the Underwriter prices the Offering and the company stock starts trading on Nasdaq or the NYSE.

Frequently Asked Questions

If your company has a good management team and a great product or service with year to year revenue growth, you would be a good candidate for an IPO.

An IPO can take 6-12 months depending on how long it takes to complete the required 2 year Audit and the SEC registration process. You may experience delays by the Underwriter and market conditions.

An IPO can cost $250K – $300K plus Underwriting fees that are paid out of the IPO. The total fees average about 10% of the IPO funds raised.

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