What does it mean to “go public”?

Initial Public Offering

Advantages
Obtaining New Equity Capital
Enhanced Ability to Borrow
Enhanced Ability to Increase Equity
Liquidity & Valuation
Disadvantages
Potential Loss of Control
Public Exposure
Money and Time
Costs
Costs of Going Public
Average cost= $500,000
SEC Reports
Accounting fees
Legal fees
Underwriter
 Underwriter’s discount
SEC fees- .02%
Printing costs
Timing of Going Public
Is Company Large Enough?
What is Amount of Earnings and Strength of
Financial Performance?
What are the Market Conditions?
How Urgent is the Need for Money?
What are the Needs and Desires of Owners?
Underwriter Selection
Start the “Process”
Select Managing Underwriter
Will develop a syndicate
Mutual contact/referrals
What should you look for?
Reputation
Experience
Cost
Distribution Capacity
Advisory Services
Registration Statement & Cost
Next Step= Planning Meeting
Length of time for registration process
Common hold-ups
Registration Statement
Prospectus
Registration statement
Securities & Exchange Act
The Prospectus
Cover Page
Preliminary
Final
Table of Contents and Executive Summary
Introduction
Risk Factors
Use of Proceeds
Dividend Policy
The Prospectus
Capitalization
Dilution
Financial Data
Business
Management & Owners
Capital Stock
Underwriter Information
Actual Financial Statements
Other Issues
Legal Issues
Quiet period
 Length
 Why?

State laws
Effects
Myths
In this market, high-tech is the name of the game
If you’re doing OK, don’t worry about the aftermarket
The analysts will follow you through think and thin
The young entrepreneurial companies will continue
to get the spotlight this year
Myths
You need to be profitable to get a high valuation in
this market
Of course, you want to be the next Netscape
During your IPO, you’re the center of attention
Somebody knows where the IPO market is headed