IPO Content

Enhanced prestige and increased capital make the IPO process an alluring decision for many private companies. However, an initial public offering requires a complex system of evaluation and requirements that must be executed perfectly. Thus, when considering a checklist for the IPO process, it’s usually rather long.

SPAC is short for a “special purpose acquisition company.” The intent is to raise money through an IPO (initial public offering) for the purpose of acquiring a private company that already exists. Subsequently, a SPAC has no commercial operations and exists solely for acquisitional purposes.

If you’re thinking about bringing your business public, understanding the entire IPO process is critical. There’s a reason a system is in place for going public. Everything must be done in order, otherwise, you risk serious fines from the SEC.

This article discusses the advantages and disadvantages of going public through an IPO from the company’s standpoint. It also addresses implications for the stakeholders, including venture capital or private equity firms and the IPO company’s management team, Board of Directors, and employees.

A company should go public when it qualifies under one of the listing standards and meets other qualifications for initial listing of operating company shares on a stock exchange, and its SEC registration statement is effective. A company should have significant growth potential to achieve an acceptable valuation for IPO pricing and make the investment attractive to future investors.

The IPO process will take enormous amounts of time, distract attention from running the business, possibly create conflicts, disclose company information publicly, and cost money. For a management team going through a first-time IPO, the learning curve is high. A company must be diligent, even zealous, about its commitment to the IPO process.

Going public through an IPO or other method is an exit vehicle to raise capital and finance corporate growth and future M&A transactions. It may be lucrative for business founders and early investors, helping them cash out over time and diversify to reduce investment risk.