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Initial Public Offering Process: How it is Done?
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In business, finance, and trade, process is an essential ingredient to complete the recipe of a successful commercial result. It typically involves inputs (pre-requisite data that must be entered before any method can be put into place), different methods, and outputs (the expected results once methods have been applied to the inputs).
In addition, it is a collection on interrelated structural activities that generates something of value for a corporate organization, its stakeholders, and/or its clientele. In other words, the process that a corporate organization will adopt will help them realized the services that they are offering to the public.
It works like a cookbook wherein the ingredients are prepared first before proceeding to the step-by-step procedure of cooking a particular dish or cuisine. Once the ingredients and the procedures have been satisfied, you will be able to arrive with a very delicious meal which you can enjoy. Such delicious meal represents the achievement of a corporate organization in terms of excellent delivery of products or services to the public and generated revenue for the company.
Process does not limit itself on corporate organizations. Even external matters require process in order to facilitate smooth flow of the application to the business community. One of which is the initial public offering.
Also referred to as IPO, initial public offering is the first or the initial sale of a company’s common shares to the public. It is primarily for raising additional capital or funds for a company that will be used to sustain its growing needs (production, distribution, and others). The term merely applies to initial issuance of common shares to interested public investors. Thus, any late issuance of common shares will be referred to as a secondary market offering.
The IPO process involves rules and regulations imposed under different governing laws and bodies, such as the Federal Securities Act of 1993 and the U.S. Securities and Exchange Commission, respectively. In addition, state laws affect the IPO process, though there are exceptions applicable especially of the common shares are listed with a major stock exchange such as the NASDAQ and the NYSE.
The process generally starts with the company selling the common shares to the public (the issuer) to draft a prospectus. Such prospectus contains the details about the company’s history, background, finances, offered products and/or services, industry environment, and other related information. The Securities and Exchange Commission actively scrutinizes the content of individual IPO prospectus before proceeding to approval. Companies going public typically employ the services of major law firms during the drafting process.
After the SEC approved the prospectus, the prices of the common shares are now finalized and the IPO will now be entered into a “free riding” period. The underwriters, which are composed of several investment banks, will now offer the common shares for sale to the public in various ways. All offers that will be made must have an accompanying copy of the approved IPO prospectus. Any misleading and false statements are strictly prohibited while the offering of common shares for sale within this period is going on.
The executives of the company going on public will be held responsible for any misleading information or omissions on the prospectus. In the same manner, the underwriters will also be held liable if they failed to conduct a reasonable investigation about such misleading information or omissions.
Initial public offering involves a process, which will keep IPO flowing smoothly and protected against individuals or groups who want to take advantage of the process itself.
Initial Public Offering News
Matador Resources Company Announces Completion of Initial Public Offering
DALLAS, Feb. 7, 2012 /PRNewswire/ --Â Matador Resources Company ("Matador") announced today that it has completed its initial public offering of 13,333,334 shares of its common stock at $12.00 ...
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Facebook has filed paperwork for an initial public offering of stock. Its public debut will be the most anticipated tech IPO since Google went public in August 2004.
Read more...Caesars prices shares at $9; IPO set for Wed.
Casino operator Caesars Entertainment Corp. has priced its initial public offering of 1.8 million shares at $9 apiece.
Read more...Caesar’s Scaled Back IPO Prices At $9.00 a Share
Caesar’s Entertainment priced its initial public offering at $9.00 a share, according to a person familiar with the matter. At $9.00, the company will raise roughly $16 million in proceeds.
Read more...Caesars Prices Shares at $9
Casino operator Caesars Entertainment Corp. has priced its initial public offering of 1.8 million shares at $9 apiece.
Read more...Caesars Entertainment Fetches $1.13 Billion Valuation After Pricing of IPO
Caesars Entertainment Corp., the casino chain saddled with more than $22 billion in debt, completed an initial public offering that values the company at $1.13 billion.
Read more...Caesars prices shares at $9; Wednesday's offering would value company at $1.14 billion
LAS VEGAS, Nev. - Casino operator Caesars Entertainment Corp. has priced its initial public offering of 1.8 million shares at $9 apiece.
Read more...AutoTrader.com Said to Be in Talks for Initial Offering
AutoTrader.com Inc., which runs a website linking buyers and sellers of new and used cars, is talking to banks about a potential initial public offering, a person with knowledge of the discussions said.
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