Here are some tips for all Initial Public Offerings (IPOs):
- Consider the timing and disclosure impact of potential acquisitions – A privately held company generally has no obligation to publicly disclose any plans that it may have to acquire other businesses. A public company, or even one in the IPO process, may be forced by the Securities and Exchange Commission (SEC) to provide detailed information about its acquisition plans. This may have a significant impact on the acquisition negotiations, the IPO itself, and the perception by investors and underwriters of the strength and future performance of your company.
- Carefully plan the schedule of management team members to avoid slowing down the process – One of the biggest challenges of an initial public offering is scheduling the time of management team members that are critical to the IPO process and to the operations of the company. Neglecting either could result in a delayed IPO or inefficiencies within the company. Carefully plan ahead so that management can stay on top of their new duties as well as their regular job.
- Be wary of being "in registration" – Although it is not law, it is commonly understood that a company is "in registration" of an IPO when it has selected its underwriters. Being "in registration" means that many SEC restrictions are placed on a company’s ability to freely discuss anything relating to the IPO. Work closely with your attorney to understand the restrictions themselves and to comply with them.
- Be diligent with stock certificates – When a company is private, the in-house attorney often acts as the company’s transfer agent and can easily replace lost stock certificates. When a company is public or near the release of an IPO, these transfer duties are passed on to a professional transfer agent selected by the company. Replacing lost certificates can become incredibly expensive because professional transfer agents frequently charge a percentage of the value of the certificates being replaced. Long before this point, your company should remind all stockholders to locate their certificates or request replacements while they are cheap. For the sake of legal safety, you should have your attorney confirm that all stock issuances and stock option grants were made in compliance with state and federal securities laws.
- Identify the need for special accounting work as soon as possible – Sometimes the SEC or underwriters request detailed audits of all financial information pertaining to your company’s activities. This audit may take a significant amount of time to complete, especially if a financial statement has not been prepared in more than six months. Ask your underwriter how much information it will need so you can anticipate if you should begin an audit soon.
- Listen to the underwriters – Once your company’s road show has started, it is nearly impossible to modify. Underwriters have a great deal of money riding on your company, so they have every reason in the world to make sure your IPO is as successful as possible. Underwriters will probably also have more experience in IPOs than anybody in your company. Ask them for help if necessary, though underwriters will frequently hire coaches to help with presentations.
- Don’t disappear until after the closing – IPO closings are usually very disappointing events compared to the stress and thrill of preparations. Some executives will attend and try to turn them into small parties while others, especially on the West Coast where closings are typically held early in the morning, will disappear. All executives will want to take vacations around this time to get away from work and spend time with friends and family that they have neglected during the last several weeks. Be sure to have all management team members at least check in with your attorney to be sure all documents requiring their signature have been signed. Try to have at least some of them stay to sign any last minute changes in closing documents.
Do I Need an Attorney To Help Give Me More Tips?
Definitely, an attorney should be a vital member of your IPO team. Not heeding the careful advice of an attorney can lead to the fight of your life with the SEC. An experienced business lawyer can smooth the IPO process and help make it as successful as possible.