How to Take a Company Public (IPO)

When running a company, there are decisions you have to make to make sure that the growth of your business will be sustained a few years from now. If you are thinking of expanding your services, adding more product range, or branching out to a few more outlets, then you need some capital to accomplish your many business plans. One way to secure more funding and support your plans for business expansion is through IPO, or initial public offering. Small-scale and relatively young companies often take this route to raise money without losing ownership or control of the business by issuing stocks to shareholders, though large companies may also venture into this to become publicly traded. No matter what kind of company you’re running and the reasons that prompted you to take the company public, you must take caution when taking such a big step.

Here are some steps to guide you with taking the company public:

Step 1: Turn your business into a corporation.

Before you take any further step into taking your company public, first you have to turn your business into a corporation. The best person to help you with this is a business attorney who can help you sort out all the planning needed and handle the paperwork. Before you make it official and have the attorney prepare the legal documents, take time to consider your options to know for sure if this is best move for your situation or not. Let your business attorney walk you through the requirements, the benefits and disadvantages, and the laws and regulations you have to consider.

Step 2: Create some good publicity for your company.

You certainly don’t want to take your company public and just wait out there for any takers. You’d want to first make a good name for your company through marketing and publicity to bait the best shareholders you can get. You want potential investors to be interested in your company even before you take it public. This strategy will surely help your business snag some good investors and encourage them to help accomplish some of your long-term business plans.

Step 3: Have your financial records ready.

Let an auditor or financial expert prepare all the financial records of the company. Once you take it public, potential investors or shareholders would surely check its financial status and even review the policies and all the other transactions that have taken place. Make sure that all records are verified and carefully reviewed to avoid any discrepancy that can put off some investors or taint your company’s reputation.

Step 4: Hire a corporate attorney that can handle the job expertly.

Don’t just hire any attorney but choose one who is trustworthy and fully capable of handling your business needs. In these cases, a corporate and securities law attorney is best suited for the job. The attorney should be able to fully explain to you the regulations, laws, and formalities involved in IPOs. Remember that financial penalties are at stake if you don’t hire a professional who can expertly guide you with every decision you have to make, from registration to tons of other requirements.

Step 5: File a registration statement.

With help from your securities lawyer, you should file a registration statement with SEC or the Securities and Exchange Commission once all legal documents are ready and it was made clear to you what you should be expecting from IPOs. You can start selling the company’s stock publicly once the SEC has declared the registration effective.

Related questions:

1. What does IPO mean?
2. What are the preliminary steps you should take when your company public?
3. Why do companies go for IPOs?
4. What are requirements when taking a company public?
5. How can you get good investors?

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Photo Credits: emples

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