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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 Companies News
Facebook IPO to Drag Down Secondary-Market Trading This Year, Nyppex Says
Facebook Inc.’s (FB) initial public offering and the IPOs of other social-media companies will lead to a 24 percent decline in secondary transactions in 2012 as fewer big companies remain private, according to Nyppex LLC.
Read more...New rules govern Vietnamese state firm IPOs
Ha Noi (Viet Nam News/ANN) - A Vietnamese Ministry of Finance circular providing guidelines for the initial public offering (IPO) of equitised state-run companies will go into effect on February 15th.
Read more...Brasil Travel Cancels Initial Share Sale as Dozens of Others Wait to Offer
Brasil Travel Turismo e Participacoes SA canceled an initial public offering, citing “unfavorable” market conditions, as the operator of the country’s stock exchange says dozens of other companies are waiting for sentiment to improve to go public.
Read more...Facebook Files Initial Public Offering Papers
Facebook is about to find out how many friends it has. The social networking giant wants to sell shares to the public. It filed papers for an initial public offering Wednesday. With about 800 million users, Facebook is one of the most visible companies in the world. But until now, the financial side of Facebook has remained largely a mystery. For more, Melissa Block talks to NPR's Steve Henn.
Read more...A look at how some IPO stocks have fared
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...MCX to launch $125 mln IPO Feb 21 - sources
MUMBAI (Reuters) - Multi Commodity Exchange (MCX), India's biggest commodity exchange by turnover, plans to launch an initial public offering of shares on February 21 to raise up to $125 million, two sources ...
Read more...Facebook's Pre-IPO Rush to Make Money Off of You
Trying to raise bunches of money from investors for its upcoming initial public offering, Facebook's trying to prove it can make money off of all that social networking we do. There's no question lots of people use Facebook. But how exactly Facebook is monetizing those "engaged" users, many of which never visit Facebook.com, is still questionable. Now's the time for Facebook to show what kind of ...
Read more...They're not Facebook, but social media stocks run up anyway
The hype over Facebook's initial public offering has excited investors revisiting other social media companies, even though most of those stocks have plunged since the fanfare of their own IPOs. Trading ...
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