Company Public One Of The Most Common Essay

Length: 5 pages Sources: 5 Subject: Business Type: Essay Paper: #90616633 Related Topics: Companies, Private Security, Public, Stocks And Bonds
Excerpt from Essay :

¶ … Company Public

One of the most common ways that thousands of corporations will raise additional capital to fund continued expansion is: through the public markets. This is because the various bonds, stocks and private securities offerings (private placements / limited partnerships) are helping to provide them with the added liquidity to achieve these objectives. As an increasing number of companies are turning to this option through what is known as an initial public offering (IPO). This is when a company will issue stocks, bonds or other type of securities when they are first going public. In most cases, these are new businesses that are seeing significant amounts of growth and are turning to the public markets to increase their working capital. ("Initial Public Offering," 2010) This is an important step for the organization that is being examined, as the IPO will help to increase its liquidity and provide the necessary capital for future expansion. At the same time, the improving economic conditions over the last year have increased the chances of being successful with this kind of strategy. Evidence of this can be seen by looking no further than information collected from Renaissance Capital on the total number of IPO's during 2010, which increased by 533% in one year. (Holmes, 2010) This is significant, because it shows how the economic and market conditions are supporting numerous companies that are going public. As a result, it is imperative that CFO understands how an IPO could help to provide the business with the liquidity that it needs in the future. To achieve this objective requires examining: the steps that will be needed to go public and establish a timeline that it would take for implementing the offering. Together, these different elements will provide the greatest insights, as the possible challenges and advantages that an IPO is offering the company.

The Required to Go Public

When a company is going public, they will have to follow certain policies and procedures. This is because the Securities Act of 1933 requires that a company must submit: a registration statement, the purpose of registration and any material disclosures. The idea is to provide as much as information as possible, for the public and regulators to make an informed decision about the IPO. This means that there must be a standardized process that will be utilized when taking the company public. As a result, the below steps are outlined as to how the process will work. (Ghosh, 2008, pp. 23 -- 30)

Step 1: Consult with a securities attorney and an accountant. This is an important first step, because both will tell you specifically what actions should be taken and they can help to prepare the company's balance sheet / financial statements (to commonly accepted accounting standards / principals). This will help to streamline the process by making sure that all financial information is transparent and clear.

Step 2: Meet with various investment bankers. During this process is when you and your attorney / accountant will discuss the kind of offering that would be most advantageous to the company. As you will examine the kind of commitment the firm is willing to make (such as: if they will guarantee that a certain amount of the offering will be subscribed to). At the same time, during this process is when the company and its investment bankers will begin to create the prospectus, by looking a financial data going back at least five-year and examining any kind of issues that could delay the offering. (Ghosh, 2008, pp. 23 -- 30)

Step 3: After the meeting various investment bankers, the due diligence process will continue with the selection of a lead underwriter and the creation of the S-1 statement. This will contain detailed information on: the company, it officers, financial situation and risk. Included inside the S-1 statement is a copy of the financial perspective. (Ghosh, 2008, pp. 23 -- 30)

Step 4: Once the S-1 statement is complete, the lead underwriter will then form a syndicate of other investment banks that will agree to sell the IPO. It is at this time that the final...


("Steps for Taking a Company Public.," 2010)

Step 5: After the SEC had approved the prospectus, the company, will more than likely going on a road to show to generate interest in the stock. This is where executives will make various public appearances and will conduct various interviews around the country. ("Steps for Taking a Company Public.," 2010)

Step 6: Once the issue is ready to go public; the lead underwriter will set the initial public offering price. This is where they will determine the overall amount of demand for the IPO in days before the offering, by gauging indications of interest from investors. ("Steps for Taking a Company Public.," 2010)

Step 7: Once the company has went public, the quite period will remain in place for 25 days. This is when various Wall Street firms are prevented from commenting about the company or issuing any kind of recommendations on the stock. (Ghosh, 2008, pp. 23 -- 30)

When you step back and analyze the above steps, it is clear that taking company the public will require a significant amount of transparency and disclosure. The reason why, is because this information is need to satisfy the various legal requirements and ensure that the company is in sound financial condition.

Estimated Timeline of the IPO

In general, the estimated timeline for taking a company public will be approximately 17 weeks. This is because, the offering will requires following a number of different procedures (which will be time consuming). As a result, there are approximately six different stages that the company will go through during the process. Below are the six different stages along with the approximate timeline for taking the company public.

Stage 1: During this stage the company will hire legal counsel, select a lead underwriter and will begin organizing all of the different financial / legal information. In general, this stage will take about one to eight weeks. ("IPO Timeline," n.d.)

Stage 2: During this stage the registration statement is filled and the completed audited information is submitted to regulators. This part of the process will take about four to eight weeks to complete. ("IPO Timeline," n.d.)

Stage 3: This part of the registration is when you are waiting to hear from regulators about the offering. As they are reviewing the detailed financial information, to determine if the offering is in compliance with the Securities Act of 1933. This will take approximately four weeks, once the information has been submitted. ("IPO Timeline," n.d.)

Stage 4: During this stage the company will receive comment from the SEC about the offering. At the same time, various institutional indications of interest are obtained, a road show will take place and the underwriting syndicate is created. This stage will occur over the course of two weeks. ("IPO Timeline," n.d.)

Stage 5: At this part of the process is when: the registration statement become effective, the preliminary prospectus is printed, the final price of the offering is established and press release will occur introducing the public to the new company. This stage will take about two weeks to complete. ("IPO Timeline," n.d.)

Stage 6: This is the final stage of the offering and security will begin trading in the public markets. During this part of the process, is when the underwriters and Wall Street analysts will remain quite on possible buy or sell recommendations for 25 days. ("IPO Timeline," n.d.)

When you step back and analyze the above timeline, it is clear that the time frames and the different stages are interconnected. This means that during some of the process, different stages could be working simultaneously with…

Sources Used in Documents:


Initial Public Offering. (2010). Investwords. Retrieved from:

IPO Timeline. (n.d.). E Investment Bank. Retrieved from:

Steps for Taking a Company Public. (2010). E How. Retrieved from:

Ghosh, A. (2008). The IPO Process. Pricing and Performance. (pp. 23 -- 30). New Brunswick, NJ: Transaction Publishers.

Cite this Document:

"Company Public One Of The Most Common" (2010, December 11) Retrieved June 17, 2021, from

"Company Public One Of The Most Common" 11 December 2010. Web.17 June. 2021. <>

"Company Public One Of The Most Common", 11 December 2010, Accessed.17 June. 2021,

Related Documents
Public Relations' Role in Launching
Words: 2469 Length: 8 Pages Topic: Communication - Journalism Paper #: 55695095

They did this by stressing the engineering expertise that the company is well-known for, coupling it with their well-respected Toyota Production System (TPS) which unifies suppliers to their internal supplier quality management standards. It is common knowledge that the TPS is a complex set of processes for coordinating with suppliers, and often requires up to a year of coordination between Toyota and a given supplier before a single product

Public Schools and Drug Use
Words: 985 Length: 3 Pages Topic: Film Paper #: 97583234

Public school culture is fairly similar even amidst ethnically and geographically diverse schools. For example, there is prohibition of classroom prayer. Students and school staff must maintain a professional and platonic relationship at all times. Any student or school staff engaging in illegal behaviors must be reported. These are just some things that every public school must do or else face potential legal problems. That being said, the culture in

Effective Communication for Improving Public Relations
Words: 2496 Length: 6 Pages Topic: Communication - Journalism Paper #: 31251671

Effective Communication for Improving Public Relations Public Relation is the name given to the function that is responsible for creating and maintaining relationships between clients or customers and an organization. Public Relationships through effective communications through areas such as brand management, advertising, media relations and crisis management is capable of creating interest trust and belief in a product or organization. Huge budgets are allocated and spent every year on advertising, yet

Public Offering One of the Most Common
Words: 1625 Length: 5 Pages Topic: Business Paper #: 12803096

Public Offering One of the most common challenges that firms will face is taking a company public. This is because the timing must be right and there needs to be clear objectives as to where new investment capital will be utilized. Those firms that are taking these factors into account will have a more successful initial public offering (IPO). In the case of Avaya, the company is considering an IPO

Company Critical Elements
Words: 1783 Length: 5 Pages Topic: Business Paper #: 88732858

Company Critical Elements Business Continuity is a vibrant industry dedicated to identifying, prioritizing and safeguarding critical business functions. From small businesses such as neighborhood bakeries to business titans such as Microsoft, each entity that can name, rate and guarantee the continued functionality of its required systems can survive in crisis. As the following analysis shows, the critical processes of all modern businesses fall into common basic categories that are vital to

Public Key Infrastructure Email Communication Has Strongly
Words: 1007 Length: 4 Pages Topic: Business Paper #: 75375316

Public Key Infrastructure Email communication has strongly increased in the last couple of years and its still growing. It's hard to find a company which doesn't use email to run its business processes both within the company and with external business partners and clients. Therefore, the eminent security threat to the company's network infrastructure and content of the company products should be priories. The use of Public Key Infrastructure (PKI) would