An IPO, or initial public offering, will change the face of any company and put it in the hands of the public. As you make the switch from private to public, it’s important that you have the right legal counsel to walk you through the process. While some companies feel that an attorney is not necessary, we have the top ten reasons you should contact an attorney concerning an IPO.
1. Keep Employees Happy With Stock Options: Important members of your organization have expectations when it comes time for your company to go public. As the value of the company grows, they expect to not only have more work, but enjoy certain perks that come from being with you since the beginning. With the help of an attorney, you can create stock options and benefit plans that are attractive to the most valued members of your team.
2. Ensure Legal Compliance Throughout the Process: With a public offering, there are certain securities laws that must be followed by all employees and officers within the organization. As these laws change and your company adapts to them, an attorney ensures that you are compliant with every relevant rule. In this way, an attorney is a key part of protecting your business from problems you may not even see coming.
3. Control Necessary Structure Changes: It’s a simple fact that once your company goes public, the corporate and capital structure will change. An attorney can ensure that the change is seamless by anticipating these needs, planning for any necessary changes and putting the new structures in place.
4. Prepare for the Initial Public Offering: Before your organization is ready to go public, you have to be in compliance with many federal and state laws. If anything is out of place, you may discourage new investors, violate current contracts or have some unpleasant surprises. An attorney can guarantee that you are 100 percent ready for your IPO in every way.
5. Draft Investor Agreements: If an accredited investor purchases your company’s stock before the sale to the general public, there are certain contracts and documents that must be in place in order to protect both your company and the investor. The best way to have these drafted is by an attorney who understands how state and federal laws will affect these contracts. The sale must be solidly documented in order to support a registration exemption and prevent future problems.
6. Prepare Annual Report: As a public company, you are expected to present information about company goals and performances at an annual meeting. Your attorney ensures that all these materials – including those with financial statements and disclosures – are complete and accurate to meet the requirements of securities laws.
7. Prepare for Annual Meeting: At your annual meeting, things like proxy handling and shareholder notification must be handled correctly in order to keep your company compliant with the laws. Your attorney understands the intricacies behind these laws and ensures that you are briefed and prepared for the presentation.
8. Promote Securities: An attorney helps you draft and design your promotional materials without violating laws and requirements by ensuring that all financial material that influences an investor or analyst is accurate and detailed.
9. Protect Shareholders: When there are only a few shareholder groups, it’s fairly easy for one to be violated by another. An attorney will prepare a shareholder agreement that protects all parties involved and minimizes risks for your company.
10. Prepare for Disaster: While you hope things go smoothly and there aren’t costly problems for your company or shareholders, the reality is that you should always be prepared for disaster to strike. Almost every business that goes public faces some type of broken regulation or law at some point. With a qualified attorney on your staff, your company can weather these problems and come out better than ever.
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.