If you operate your own private company, then the day may come when you decide you would like for the business to become a publicly owned and traded entity. This is a process known as “going public,” and it is often pursued so that a company can raise capital. It can be a rather intensive process, so before you go after it, you should become familiar with the terminology that is generally used in contracts and conversations related to going public.
The following list contains words and phrases and their associated definitions to help you better understand what certain aspects of going public entail. There is a lot more to learn regarding this action, but this list should serve as a good starting off point.
- Agent: This individual sells and buys stock for someone else. Agents receive a commission for their work, and they assume no financial risk for managing another person’s stock.
- American Stock Exchange: Often abbreviated to AMEX, this refers to the open auction market that allows sellers and buyers to engage in a centralized marketplace. AMEX is generally reserved for smaller businesses.
- Balance Sheet: This is a list containing information related to a company’s net worth, liabilities and assets.
- Blue Sky Laws: This is a general term used to describe state laws that help protect the general public against the threat of securities fraud.
- Board of Directors: Shareholders will elect a group of people to manage a company.
- Broker: This is a special kind of agent who serves as a sort of middleman between a seller and buyer of securities. Like agents, brokers also receive a commission.
- Business Plan: This contains basic information related to a business such as financial forecast, marketing strategies and overall corporate objectives.
- Capital: This refers to money that has been invested in a particular enterprise.
- Cash Flow Statement: Businesses use this to keep track of how finances are used and sourced.
- Certificate of Incorporation: The secretary of state issues a certificate to an enterprise in order to show that a corporation has in fact been incorporated. It also shows that the articles of incorporation have been accepted.
- Debt Financing: Whenever borrowed money is used to finance a company, it is referred to as debt financing.
- Equity: This refers to the stock ownership within a given corporation.
- Fiscal Year: A business establishes its end of the year for tax, planning and accounting purposes.
- Float: A number of shares of a certain stock will be traded over any given period of time.
- Income Statement: Periodically, this will be used to figure out the overall loss or profit of a business.
- Issuer: This refers to corporations that issue shares of stock to the public.
- National Association of Security Dealers Automated Quotation System: Abbreviated to NASDAQ, this is a worldwide intranet that provides dealers and brokers with price quotes on securities that are traded over the counter.
- Prospectus: This document serves as both a legal disclosure paper and a selling document. It is prepared to showcase to investors, and it is generally composed of the business’s dividend policy, use of proceeds, audited financial statements, names of principal shareholders, description of the company, dilution, intracompany transactions and other crucial material about the organization’s capitalization.
- Securities and Exchange Commission: You will often see this abbreviated as SEC, and it is a governmental agency on the federal level that keeps order over securities exchanges and stock.
- Syndicate: A collection of investment banks that distribute and underwrite new issues for securities for the benefit of the public and the banks’ customers.There are a lot of factors to take into consideration when you think of making your business go public. Make sure you understand the minutiae of what you will be doing so that nothing gets overlooked.
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.