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Initial Public Offering of Shares to 20,000 Investors—Looking at IPO the “Real Way”
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Supposedly you have assumed the highest post of a certain corporate organization and at that time the corporation is now planning to incorporate new products that will be sold under its brand name and expand the business operation from regional to national coverage. Since you are now the corporate head executive, you need to do something to sustain new corporate plans under your administration.
The board of directors suggested two possible options to sustain new corporate plans. Since the corporation now generates profit due to successful business growth, you can use such profit to secure a corporate loan. The funds incorporated in the loan will be used in sustaining the plans for inclusion of additional products that will be offered to the public and possible expansion of your business operation. The corporation has the sufficient assets that can be used as a collateral or guarantee in case the loan will falter later on.
The next option that the board suggest may is the corporation going public, or to undergo the IPO or the initial public offering process. It refers to the first sale of the corporation’s common shares to interested public investors. The revenues that will be generated through IPO can be used to sustain new corporate plans without losing the essential assets of the corporation.
As the head executive, which of the two options will you choose? Are you willing to sacrifice the corporation’s asset by making it as the collateral for the loan? Although it will be a good idea (especially if the corporation follows the limited liability concept) to secure a corporate loan, it is not a good idea to lose the assets that the corporation have. Add to it the inconvenience of high interest rate applied to monthly repayments which can affect the performance of the corporation in terms of profit generation.
On the other hand, if you will choose to go on public, the chances of selling all your common shares is high because the process itself guarantees that the underwriters involved can attract potential investors. Though it may cost you more, the generated revenue will be guaranteed and the assets of the corporation will be protected as well.
Let us again put you in a situation wherein your corporation offers 15 percent off the prices of the common shares under IPO to about 20,000 investors and they are limited to receive 100 shares, what will happen? Will such price slash on the common share create damage to the corporation itself?
Before getting into IPO, you must be first knowledgeable of the laws that govern the process. Under the Federal Securities Act of 1993, a company or corporate entity with around 20,000 investors cannot have an IPO. Keep in mind that it is an initial public offering, but if a company has more than 300 investors, the issuance of common shares must be done in public, therefore it will not fall under the “initial” category anymore.
Another thing is that the number of shares being purchased or sold is completely irrelevant. For instance, a share of a certain company falls at about $90,000 yet the value of a share of many “stocks” trade is at $0.01. Thus, the value of 2 million shares will depend on several factors like if there are a total of 2,000,000 or 200,000,000 shares issued.
Whether 20 investors or 200 shares or even 200 million shares, understanding the laws governing IPO will help you see the process in the “real way”.
Initial Public Offering By Google News
Facebook Investor Spending Month's Salary Exposes Hype - Bloomberg
 AFP | Facebook Investor Spending Month's Salary Exposes Hype Bloomberg Ryan Cefalu, who lives with his wife and two kids in Baton Rouge, Louisiana, saw in Facebook Inc. (FB)'s much-anticipated initial public offering a chance to buffer his retirement fund. His expectations fizzled along with the stock within the first ... Facebook Employees Shrug Off IPO Where are Facebook's friends? Stock slide deepens Lawsuits mount over Facebook IPO debacle |
Google, Motorola Deal Closes; Facebook IPO Probe; Tesla Model S On Tap - PC Magazine
 Wired News | Google, Motorola Deal Closes; Facebook IPO Probe; Tesla Model S On Tap PC Magazine In other news, Massachusetts regulators on Tuesday issued a subpoena to Morgan Stanley, the lead underwriter for Facebook's initial public offering, in an effort to get answers about reports that some investors and not others were informed of earnings ... Motorola's New CEO Could Be Google's Bid to Dominate Mobile Ads Today in Tech: Google Is Now in the Hardware Business |
Zuckerberg's Facebook IPO Makes Him Richer Than Google Guys - San Francisco Chronicle
 The Associated Press | Zuckerberg's Facebook IPO Makes Him Richer Than Google Guys San Francisco Chronicle See EXT5 for Facebook IPO news.) May 18 (Bloomberg) -- Facebook Inc.'s $16 billion initial public offering has made 28-year-old Mark Zuckerberg the 29th richest person on Earth. Facebook, the world's most popular social networking company, ... Biz Break: Facebook's IPO, Apple's iPhone and Google's search results all may ... Facebook IPO Makes Zuckerberg Richer Than Google Founders Facebook raises IPO price as offering nears |
Facebook IPO Eclipses Google, GM - AdAge.com
 AdAge.com | Facebook IPO Eclipses Google, GM AdAge.com Facebook Inc. gained as much as 18% in its trading debut, following a record initial public offering that made the social network more costly than almost every company in the Standard & Poor's 500 Index. The shares advanced 11% to $42.18 at 11:30 am in ... With Facebook's announcing plans for IPO, a look at how other IPO stocks have ... Facebook IPO falls flat in public debut FACEBOOK IPO LIVE: The social network goes public |
Put on a happy Face(book) - Boston Herald
 Fortune | Put on a happy Face(book) Boston Herald Even as its initial public offering remained in shambles and with Secretary of the Commonwealth William Galvin vowing to get to the bottom of how the stock was overvalued, Facebook COO Sheryl Sandberg remained mum on the social network's woes, ... Is Brain Drain A Threat To Facebook's Future? Facebook COO talks careers to HBS grads Last Call: Facebook Fiasco Is Heading Toward Farce |
A debate: Should you jump in on Facebook debut? - The Associated Press
 Bloomberg | A debate: Should you jump in on Facebook debut? The Associated Press At some point in the next few days or weeks, seize on the IPO as a rare opportunity to prosper from the ingenuity of a headstrong visionary in the mold of Apple's Steve Jobs, Microsoft's Bill Gates and Google's Larry Page and Sergey Brin. Facebook IPO: More whimper than bang Facebook Underwriters to Split $176 Million in IPO Fees Facebook IPO Pricing: Investors Brace For Wall Street Debut |
Knight Capital Says Its Facebook Loss May Total $35 Million - Bloomberg
Knight Capital Says Its Facebook Loss May Total $35 Million Bloomberg Knight Capital Group Inc. (KCG) estimated that it lost about $30 million to $35 million trading Facebook Inc. (FB) because of technical problems at Nasdaq OMX Group Inc. (NDAQ) related to the social-media company's initial public offering. |
Google Beats All at Keeping Secrets... So Far - Huffington Post (blog)
Google Beats All at Keeping Secrets... So Far Huffington Post (blog) Facebook, News Corporation and Google are the behemoths involved. Facebook's ignominious Initial Public Offering, and its stock-price slump that followed, have revealed that secret (and (suddenly more realistic) information about its financial ... |