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An initial public offering, or IPO, is the first sale of a corporation’s common shares to the investors on a public stock exchange. The main purpose of an IPO is to increase the capital for the corporation. While IPOs are effective at increasing the capital, your firm is also listed on the stock exchange and subject to heavy regulatory compliance and reporting requirements. The process of selling these shares that were earlier considered as private has been held to new investors for the first time. The other name for such type of initial public offering is going on the market. So, how do you set forth an initial public offering?
Step 1 Visit the Securities and Exchange Commission
Pre-prepare all the required IPO documents as indicated by the current SEC requirements. Try to create an IPO marketing package, including all IPO documents, your business plans and all the details of profit-and-loss projections for the last three years.
Step 2 Visit nyse.org to find a local road show
You can go on a “road show” to all of the major cities all over the country to market your company stock to institutional investors, like mutual fund and pension managers for the growth and profit of your company.
Step 3 Get an underwriter
You can contact investment banks who offer underwriting services to other companies wanting public offering. You can select the underwriter who can put the highest value on your company’s shares. You can sell the required share to the underwriter and then the company can sell them to the common public.
Step 4 Pick an exchange
Try to select a stock exchange to serve as the trading venue for your company’s shares. This process can take anywhere from 20 days to 80 days depending upon your firm’s financial standing.
Remember, raising capital through an IPO is a great way to begin a business or keep one afloat.