How a company goes public
Select Underwriters and Legal Advisors:
Companies typically choose one or more underwriters (investment banks) to assist with the IPO process. Underwriters are responsible for organizing and facilitating the IPO. Additionally, legal advisors are hired to ensure compliance with regulations.
Conduct Financial Audits:
The company undergoes financial audits to ensure the accuracy and transparency of its financial statements. This is typically performed by a registered accounting firm.
Prepare IPO Prospectus:
The company prepares an IPO prospectus containing information about its business model, financial condition, future plans, risk factors, and other pertinent details. This prospectus is submitted to regulatory authorities for review.
Submit IPO Documents:
The company submits IPO documents, including the prospectus and other necessary filings, to relevant regulatory authorities (often the Securities and Exchange Commission, SEC). This process involves regulatory scrutiny and approval.
Determine Stock Offering Price:
The company, in collaboration with underwriters, determines the offering price of its stock. This is typically decided through market research and investor feedback.
Conduct Roadshow:
Before going public, the company often conducts a series of roadshows to introduce itself to potential investors. These presentations cover the company's business, management team, and future outlook, helping attract investors and finalize the stock offering price.
Accept Investor Subscriptions:
Following the roadshow, investors can subscribe to the company's stock during a specified subscription period.
Set Listing Date:
Once investor subscriptions are received, the company can set the listing date for its IPO.
Initial Public Trading:
On the listing date, the company's stock officially begins trading on the stock exchange. At this point, the company's shares are available for public purchase and trading.
Maintain Regulatory Compliance:
After going public, the company must continue to comply with exchange rules and relevant regulations. This involves regularly disclosing financial reports and other information to investors, analysts, and regulatory authorities.
