Initial Public Offering
Initial public offering (IPO) or stock market launch is a type of public offering in which shares of stock in a company usually are sold to institutional investors (that price the company receives from the institutional investors is the IPO price) that in turn sell to the general public, on a securities exchange, for the first time. Through this process, a private company transforms into a public company. Companies use Initial public offerings to raise expansion capital, to possibly monetize the investments of early private investors, and to become publicly traded enterprises.
A company selling shares is never required to repay the capital to its public investors. After the IPO, when shares trade freely in the open market, money passes between public investors. Although an IPO offers many advantages, there are also significant disadvantages, chief among these are the costs associated with the process and the requirement to disclose certain information that could prove helpful to competitors, or create difficulties with vendors.
Details of the proposed offering are disclosed to potential purchasers in the form of a lengthy document known as a prospectus. Most companies undertake an IPO with the assistance of an investment banking firm acting in the capacity of an underwriter. Underwriters provide several services, including help with correctly assessing the value of shares (share price) and establishing a public market for shares (initial sale). Alternative methods such as the dutch auction have also been explored as well.
Many highly visible companies have recently made the transition of “going public”. Companies such as Face Book, Google, Orbitz, and Twitter are among many recognized names. The process of taking your company public can be a very powerful wealth creation tool. Entrepreneurs that feel their business model has exceptional prospects should carefully consider this financing option.
Nevertheless we at Vantage Advisors understand the majority of business owners are not familiar with the procedures and requirements when conducting an initial public stock launch, yet in order to complete the process they must make critical decisions and get involved in negotiations in many different areas. Quite often decisions and negotiations are in areas that are very new and unfamiliar to the business owner. We realize these conditions can easily create a very stressful situation for many entrepreneurs. For this reason Vantage Advisor Company management has simplified and streamlined the Initial Public Offering process in such a way to educate business owners while instilling a sense of comfort and control from start to finish.
Feel free to contact us about discussing practical options for your business.