Preparing your company for an IPO can be an exciting time and a sign that your business is really taking off. An IPO stands for “initial public offering” and it is when a company transitions from a privately owned or held company to a publicly traded one. Essentially, when a company sees the potential for enormous growth they will open up their business to allow for stocks in their company to be publicly traded on the open market. Transitioning to an IPO is usually expensive, but the benefits include expansion, acquisition, and broadening of a specific market share. Prepping your company for an IPO can be complicated too. Here are some ways you can prep your company for an IPO.
- If you are the owner of the company or a majority share holder, it is important to realize that opening up your business to the whims of Wall Street can mean that you need to relinquish a percentage of the control of your business. The SEC, or the Securities and Exchange Commission, has a number of complex rules and regulations about how much control a single stockholder can have when a company is public. Once your company goes public it is important to have the necessary acceptance to let your company grow according to the fluctuations of a public market.
- The SEC will also want to see an overwhelming amount of financial documentation. This is especially true if you are an overseas business making your way into the US market, or vice versa. When your company is publicly traded, your financial information has to be public too. So it is important to be prepared to be as transparent as possible.
- When your company goes public, you want to be wise about consulting with a financial broker or a seasoned investor to see if you company is fully prepared to go public. Perhaps your company is not fiscally ready to perform to the best of its ability once it is publicly traded. There are many companies that go public too soon.
- Also, there is no easy “click here” option to file your official IPO registration. There are a number of official and financial documents to fill out before you can find your name on the official registry of publicly traded companies. However, it can be exciting to see your business’ name flash by on the list of companies and how much each stock is selling for.
- Lastly, be prepared for all of your documents and registration to take a few weeks before it is officiated. It will take a while for you registration application to go through the system. It is important to understand that this is not an easy process. However, once you are officially registered it can be extremely rewarding to see the stock market and investor response to your company’s trading capabilities. As the stock market is making a rebound, now has never been a better time to prep for an IPO so that your company can be publicly traded.