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How to Take a Company Public

by Staff | April 25, 2016

Business Corporate

Businesses that are successful will reach a tipping point. That tipping point will be to either go public or to stay independent.

Why would any business want to go public? Taking your business public is the closest thing to having your own personal ATM machine printing money without any work on your part, because it is now a business that has taken on a whole new life that can run on its own with a global reach and vast resource.

However, millions of companies have gone public in the past, and out of all the best in the world, only a few thousands remain on the stock exchange.

What happened? When you take a company public, the rewards have gotten much higher but so has the competitiveness to stay alive with all the ever-changing rules and regulations that must be complied, and failing to do so will invoke huge penalties or bring the company to its knee.

It has become a dog-eat-dog world.

If you think your business has what it takes to go public along with the right push to gain the necessary momentum, your business could also reach that tipping point where trading becomes a reality.

Getting the Investment Bank

First and foremost, you’ll need to work with an investment banker. An investment bank is necessary to help with the evaluation and focus on the financial aspects of the business. They figure out whether or not you have the profits and capital to get an IPO (Initial Public Offer) where the business is giving an offer to the public.

You will need to register with the Securities and Exchange Commission (SEC), which a bank could assist you with. It’s very rare for a company to not get a good company to underwrite them.

Often, you’ll get several offers, but in order to get to this point, you’ll need to have at least $10 million in revenues and at least $1 million in profits to get considered.

The annual growth of your company also matters here. There needs to be a high ratio of profit that comes through for at least 5 years, otherwise you may not be able to gain an IPO or an investment bank underwriting.

Once you pick a bank, they will focus on raising funds and focusing on what price point to sell shares; they will make commission on the sale of shares; and you’ll need a full valuation before this happens.

Filing with the SEC

After you have worked with a bank, you’ll need to focus on filing with the SEC. You can hire someone to help you with the registration, or you could try to figure it out yourself.

It’s best to leave this to the professional and hire a good accountant to assist you with the filing.

Once you file the correct forms (S-1), you will be able to start focusing on selling stocks in your IPO, and selecting the stock exchange you choose.

Waiting for the Decision

Finally, you will need to wait a set time before you get approval from the SEC.

  • If they approve your IPO request, you will be able to discuss your filing with investors, raise funds, and then get your IPO listed on the New York Stock Exchange.
  • If you are not approved, you’ll need to adjust. Then resubmit again.

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