An initial public offering, or IPO, is the first sale of
stock by a company to the public. A company can raise money by issuing either
debt or equity. If the company has never issued equity to the public, it's
known as an IPO. Companies fall into
two broad categories: private and public.
Privately held companies have fewer shareholders, usually owner, their family and friends and sometimes venture capitalist and angel investors. The public is not able to invest in private companies. Private companies have benefits of not having to disclose much information about the company. It
usually isn't possible to buy shares in a private company. Public companies offered some part of their business to the public and trade on stock exchange so initial public offering is often called "going public". On the other side public companies can have thousands of shareholders and are subjected to rules and regulations. Public companies in United States must report to SEC and produce quarterly and annually reports. They also have to adhere to regulations and requirements set by stock exchanges on which they are listed.
Why go public? Going public is mostly used to raise cash and a lots of it. With initial public offering you can raise the largest sum of money compared to other methods of going public. Because increased supervision public companies usually get better rates when they are issuing debt. As long as there is market demand, a public company can
always issue more stock. Thus, mergers and acquisitions are easier to do
because stock can be issued as part of the deal. Trading in the open market means liquidity. This makes it possible to implement things like employee
stock ownership plans, which help to attract top talent. Being
on a major stock exchange carries a considerable amount of prestige. You can always raise more cash with second offering.
An initial public offering (IPO) is the first time that the
stock of a private company is offered to the public. IPOs are often issued by
smaller, younger companies seeking capital to expand, but they can also be done
by large privately owned companies looking to become publicly traded. In an
IPO, the issuer obtains the assistance of an underwriting firm, which helps
determine what type of security to issue, the best offering price, the amount
of shares to be issued and the time to bring it to market.
When a company starts an IPO process a specific set of event occur. The chosen underwriters facilitate all of these steps.
• An external IPO team is formed, consisting of an
underwriter, lawyers, certified public accountants (CPAs) and Securities and
Exchange Commission (SEC) experts.
• Information regarding the company is compiled, including
financial performance and expected future operations. This becomes part of the
company prospectus, which is circulated for review.
• The financial statements are submitted for official audit.
• The company files its prospectus with the SEC and sets a
date for the offering.
IPO process demands increased time, effort and attention but we are here to help you.
MMG’s unique strategy ensures that our clients invest a minimal amount of time in order to complete the entire IPO process. We enable our clients to remain focused on building their existing business while the IPO process is underway.
Mina Mar Group team will help guide you through the IPO registration process and help you address the critical steps that are needed throughout the IPO – and beyond.
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