How to Take a Company Public
Deciding whether or not you should take your company public or not is crucial for the success of your business. It takes time to decide, so to file and register your company so you really have to get ready for it.
Follow a step by step process so your company can make it into the stock exchange.
A publicly traded, small enterprise, isn’t it nice?
You might think that taking a company public or considering Initial Public Offering (IPO) is only an idea applicable for big, multinational corporations like Microsoft or Vonage. However, the truth may surprise you. There is actually no minimum asset requirement or revenue regulation to make your company a publicly-traded one.
This has been a well-guarded secret in Wall Street until recently. Almost half of the publicly traded companies here earn less than $3 million; others are startups, while some do not show up profit at all.
Reasons Why You Have to Go Public
The fact of taking your company public entices you, right? There are a lot of reasons why you should go public. It’s a nice source of capital, especially if you really want your business to expand. Likewise, going public protects your business from borrowing money. You’ll simply have a lot of cash coming from the public to spend for your expansion.
Steps in Making Your Company Public
- File for a registration statement at the Securities and Exchange Commission (SEC) - Take a lot of time while filling up the forms. See to it that everything that you write is correct and accurate because any errors or misleading information in your statement may cause the SEC to suspend or deny your application. The SEC will then perform a due diligence review to check if what you’ve written down is accurate. When they find out that your statement is accurate, they will rule it effective and that would be the time that you can start selling shares to the public.
- Look for prospective buyers - Do the underwriting process that is, going and convincing investors to buy your company securities so they can resell it to the public. The investors will give out the Preliminary Pamphlet to the potential buyers so they can know what they are going to buy. Written in the Preliminary Pamphlet are the pros and cons of investing in your company. Thus, you have to do a marketing trip. The marking trip includes explaining your business plan, methods and objectives, as well as your answers to their questions relevant of why your company went public.
- Make sure your company looks good with the underwriters - After the SEC decides that your registration statement is accurate, the underwriters will put a price on what they think is the price of your stocks to be sold. Thus, see to it that you and your company impress the underwriters! You don’t want to disappoint them, do you?
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