The initial public offerings industry is an excellent source of capital to help in business expansion. From IPO filings to IPO listings to the actual initial public offering, the process is involved and you need to understand how the industry operates. There are also strict rules and regulations that govern all IPOs. The Spitzer rule for instance, prohibits a company from hiring Wall Street stock analysts to do research prior to the IPO.
An IPO listing begins with the proper price valuation of your company. If the price of the IPO is too high, investors won't purchase the stock and you'll not get the necessary capital infusion. Conversely, price it too low and you leave capital on the table that could've helped your company. That's why it's essential to review an initial public offerings (IPO) industry overview prior to any action. Therefore, here are a few items to consider:
1. View the most recent industry IPOs.
2. Know the regulations that govern the business initial public offering industry.
3. Use an IPO industry overview to decide if this is the right route for your business.
Evaluate the current initial public offering information in the industryTo properly understand the investment climate for new initial public offerings, it's vital to find out what companies are expected to go public and the pricing information for each. If possible, find a company from within the sector in which your business operates or one that's roughly the same size, to attain an adequate IPO comparison.
Examine the regulations for initial public offering listings to further understand the industryThe IPO industry has a stringent set of rules to which every company must adhere. While you can hire an IPO law firm to handle the details, it's necessary to understand the general rules of this process. Without knowing the general regulations, you're putting the fate of your company in the hands of initial public offerings firms.
Securities and Exchange Commission, which is the government agency that regulates the industry. Contact the officials at the Financial Industry Regulatory Authority for any questions about the industry. Its IPO Distribution Manager is a web-based application that allows members to transmit distribution information directly to the National Association of Securities Dealers (NASD).
Know the pros and cons of the IPO industryAs with any sector or business, there are advantages and disadvantages to the IPO industry. Taking your company public can provide a cash infusion, but know you are beholden to shareholders. This brings a completely new list of responsibilities and regulations for you and your employees.
Pepperdine University to obtain an easily digestible industry overview. Employ the IPO tutorial from E-Commerce Times to investigate the IPO industry further.
- Make sure your business initial public offering comes at a time of an amenable stock market climate. You don't want to take your company public during a down market because it'll be very hard to get the highest target price for your IPO.