Is Your Business Good to go Public?

Is Your Business All set to go Public?

The majority of business owners with vision and huge growth plans for their businesses have to sooner or later make a crucial decision that will have a huge effect on their futures: Do they remain a private business or do they attempt to raise additional capital by issuing shares to the public?
There are a number of different questions to ask when deciding on if and when it's time to go public, including:
* What does your business have to offer investors?
* Are you capable of clearly presenting your business's vision to potential investors?
* Can the business take care of the expenses involving taking a company public?
* Are you ready to relinquish some control over your business and handle the demands of both shareholders and regulators?
* Have you thought about the tax status and executive compensation implications associated with going public?
* Does your company have a strong management team capable of leading a company through the laborious process of going public and running it efficiently and effectively once it attains that goal?
* Do you have an experienced and knowledgeable board of directors, including members from outside the business, aligned?
* Does your business contain the proper infrastructure to produce reliable and relevant information regarding its performance, which could have formerly been kept mainly discreet, on a timely and regular basis?
* Is your business capable of sustaining growth and shareholder value down the road?
If you've done that self-examination and are confident that you're in a position to proceed with an initial public offering (IPO), you must determine if the timing is right to take this big step.
You'll have to think about the overall state of the economy and the strength of the stock market to determine if the time is right and what an appropriate share price will be in relation to those conditions. While it may not always be possible, the perfect time to enter the market is during a cycle when stock indices are on the rise, especially pertaining to other businesses in your sector.
A solid investment bank, or underwriter, can be of great benefit in helping with your timing and IPO pricing decisions. An underwriter with understanding of your company's industry, a sterling reputation and history of past IPO successes - which can confidently lead a syndicate of other underwriters to help sell your offering - is exactly what you're looking for.
By working with an underwriter and financial advisors in conducting a preliminary investigation, it should be possible to come up with a range of prices at which your company's shares could be sold to the public. Market conditions can affect these decisions right until the day you select an offering price and how many shares to issue, but your research of the market's willingness to accept new stocks, similar companies' share values and various financial formulas should make you confident with your final decision that will help you achieve your goal of attracting institutional investors, broadly distributing your shares and providing liquidity and a sufficient public float in the aftermarket.
This long process does not come cheap, however. There are a number of costs which need to be covered, and many of them won't change even if your IPO isn't as successful as hoped.
Most underwriters charge a commission of from six to 10 per cent of the size of the offering, which will be the greatest initial cost businesses face. The commission rate is usually negotiable and can vary depending on such factors as: the size of the offering; the kind of stock being sold; the terms of the underwriting contract; the nature of the company's business and its state of development; current market conditions; and also the going industry rate for similar offerings. Underwriters are also usually granted an over-allotment option which allows them to subscribe for additional shares if they're able to sell more than originally planned.
Legal counsel for the company and the lead underwriter must become involved to prepare the listing or offering document in addition to drafting and reviewing contracts. The underwriter agreement typically states that its legal counsel fees must be paid by the company. You're not going to find any lawyers working pro bono to take a company public.
Financial statements have to be prepared and audited and are needed for inclusion in listings and offering documents, and accountant and auditor costs vary depending on what kind of accounting issues are encountered, what type of statements will be required, the info necessary to be audited and comments received from regulatory authorities.
Documents will have to be printed according to high standards, marketing and presentation materials will have to be produced to help sell the offering, and travel costs should be factored in for road shows to draw investors in different cities throughout the country. A number of fees will have to be covered, including those for filing, listing and directors. Certain offerings may also require environmental or engineering reports to be prepared, and tax advisors might also have to be consulted.

All of these costs need to be weighed against the strategic advantages of taking a company public using an Ipo, therefore developing and reviewing a thorough and well-prepared business plan is crucial to help make the final conclusion. The better prepared an organization is in advance, the faster and easier the Initial public offering process should go.
investor relations group