Business Knowledge

IPO Process Overview

Going Public: Your IPO Checklist

Taking your company public is a monumental task. Here are the key steps.

1. Pick Your Partners:

  • Investment Bank(s): Choose lead underwriters. They are your guides, advisors, and sales force.
  • Lawyers: Essential for legal filings and compliance.
  • Accountants: Audit your financials, ensure readiness for public scrutiny.

2. Prepare for Scrutiny:

  • Due Diligence: Expect your underwriters to dig deep into every aspect of your business.
  • Regulatory Filings (S-1): Prepare a HUGE document disclosing everything about your company. This is public!

3. The Sales Pitch (Roadshow):

  • Your management team and bankers travel to meet big institutional investors.
  • Goal: Generate interest and gauge demand for your shares.

4. Pricing the Shares:

  • Based on demand from the roadshow, you and your bankers decide the final price per share.
  • Pitfall: Underpricing (leaving money on the table) or Overpricing (stock drops after IPO).

5. Listing Day!

  • Your stock starts trading on the exchange.
  • Pitfall: Expect volatility.

Benefits:

  • Raise lots of capital.
  • Cash out for founders/early investors.
  • Prestige.

Drawbacks:

  • Very expensive.
  • Loss of control.
  • Huge regulatory burden and public scrutiny.

Golden Rule: An IPO is a marathon, not a sprint. Be prepared for a long, intense, and expensive journey with significant benefits and challenges.