How to Go Public

The following contains information on an Initial Public Offering (IPO) or Direct Public Offering (DPO).

Going public means filing documents with the appropriate regulatory agency so that you can legally offer shares of stock in your corporation to members of the public.

Here is a basic outline of the step-by-step "how to go public" process

    1. Find an organization that has a relationship with an experienced securities attorney, accountant and, optionally, an underwriter. (If an underwriter is used, insist that they sign a written agreement that they will buy the shares that were not sold in the public offering.) Our firm takes companies public and has relationships with the key players this specialized arena.

    2. Meet with your officers, directors, trusted advisors and key employees and to write your goals. What are you trying to accomplish with going pubic? The goals should be written, measureable and have time deadlines.

    3. Work with the organization’s attorney and accountant to write up the prospectus. The attorney should also know how toproperly complete the Securities and Exchange Commission (SEC) documentation. The preliminary prospectus is called a “red herring.” It needs to be clearly marked to let readers know that it is preliminary and may be changed when the final prospectus is approved. Portions of the cover are often written in red ink.
    
    4. The organization helping you go public will bring in an independent accounting firm to audit the company finances.

    5. The attorney will work to make sure the prospectus follows SEC rules. Typically, the SEC will return the prospectus to be amended a number of times.

    6. Once approved, the filing fees are paid and the prospectus will be filed with the SEC.

    7. The appropriate documents are filed with the state and with the Financial Industry Regulatory Authority (FINRA). This is a non-governmental self-regulatory organization that insures that the securities industry operates fairly and honestly. In the past, these documents were sent to National Association of Securities Dealers (NASD).

    8. Print the preliminary prospectus (the “red herring) and give it to likely investors.

    9. Work with the attorney in his communication with the SEC in addressing inquiries and concerns with the prospectus. Amend the prospectus as needed.

    10. If you use an underwriter, execute the contract the underwriting organization.

    11. Set up an account to hold the money that will be given to your company by the investors and/or the underwriter.

    12. Have a printing company print the final prospectus and give it to the investors.

    13. Order the stock certificates that will be distributed to the investors.

    14. Announce the offer in “tombstone ads.” A tombstone ad lets the world know that the new security is available but is not an offer to buy. This is one of the only ads that can be run during the “cooling off” period.

    15. Decide on and announce a price for the stock offering.

    16. The organization’s investor relations team will work to promote the stock to the public through numerous channels.

    17. The proceeds of the stock sales will be deposited into your company checking account to be used for business expansion, investments, salaries, etc.

    18. Additional stock offerings can be made in the future. The attorney will draft and file the proper documents for subsequent offerings.

We take companies public. So, for additional question, please call Abstract Law.com at: (347) 766-0LAW / 766-0529.

The above is for general information purposes only. None of the above is to be considered legal or tax advice. If such is needed the services of a licensed attorney and/or accountant should be sought.