An initial public offering (IPO) is the first sale of stock to the public from a previously private company. If your business is considering going from private to public, there are certain preparations that have to be done. For example, you will need to make sure that you have the right team in place. Once your company goes public it will have to deal with more public scrutiny, get approval for financial dealings and communicate clearly with potential investors.
If your business is going public, you will have to make sure that you have a top notch IPO team in place. You will need company executives, lawyers, investment bankers and accountants who are ready to take on their new role in a public company.
Often, the executives are the same people who were in top positions while the company was private. However, there are certain situations where this is not the case. Every executive has to be committed to making the company public. The executives will likely be tasked with:
- Making important decisions
- Establishing internal controls
- Reviewing the company’s financial state
- Assessing the company’s bylaws
- Implementing corporate communication policies
- Developing quarterly and annual financial statements
- Launching investor and public affairs programs
This means the people in these positions have to be prepared for these responsibilities.
Any attorney you work with during this time needs to have extensive knowledge about the industry of your company. Your lawyer should also have proven experience of taking companies public. There are a lot of unique trials in this process. A lawyer will have to know the underwriting process, Securities and Exchange Commission (SEC) rules and regulations, and the ins and outs of the stock market. That means that you will not be able to work with just any lawyer.
Delays during your IPO can cost your company a lot of money. To an investor, a delay can seem like a weakness and make a company undesirable. You have to pick an attorney who will help you avoid delays and keep your stock competitive.
The investment banker part of your IPO team has to fit your company’s needs. You should consider the following factors:
- Knowledge of the Industry: Any investment banker you work with should be fully aware of your industry, so they understand how your company competes.
- Technical Know How: Your investment banker should also be able to serve as a market maker for your stock, have experience working with IPOs and know how to structure your offering.
- Sales Abilities: The investment bank that you choose has to be able to successfully sell your company’s stock.
- Analysis: It can also be helpful if your investment bank assigns an analyst to your business who will make your company’s dealings more public.
There are a lot of characteristics you want in an investment banker, but at the end of the day you have to make sure to find a team member that works for your situation.
The final IPO team member is the accounting firm. You need to find a nationally accredited accounting firm to help give credibility to your financial statements. This will make your business look better in the eyes of investors and ensure you comply with all guidelines and regulations related to taking your business public. This member of your team will help you make sure all of your financial information is accurate and filed correctly.
Put Together Your Team
As you put together your team, it is important to realize that you may not be working with all of these people right now. You need to build a team that will help you successfully take your private business public, so you may have to look for different strengths than you had previously. Find team members who will be an asset through the IPO process.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.