Going public with your private company can be highly profitable. One of the hottest initial public offerings (IPO) of 2021 is happening this fall. Authentic Brands Group – which currently owns brands like Eddie Bauer, Forever 21, Nine West, and Sports Illustrated – has filed the paperwork to do an IPO sometime this fall. But you don’t have to be an international, multi-million dollar business venture to consider preparing your business for an initial public offering. The following article covers some of the actions you can take to get ready.
But, First, How Does an IPO Work?
A private company does not sell its shares to the public. An initial public offering is the first time the company’s stock is sold through a public stock exchange.
The company completes paperwork that meets Securities and Exchange Commission (SEC) standards. Afterward, companies often hire an underwriter or investment bank to help set the initial price and start preparing the company for the IPO.
As your company begins the time-consuming, challenging process of an IPO, consider the following.
Assess Your Goals to See if an IPO Works
Many business owners consider IPOs to raise cash for expansion or because early investors want to move on. Review your business plan and future goals to see if an IPO can help you achieve those goals.
Also, review the general marketplace for your company’s products and services. See what your competition is doing and how much of the market share they command.
Check Your Financials
It’s usually important to have a track record of profitability. Investors planning to buy your stock when it drops usually want to see that the company is financially secure before the IPO happens. Having up-to-date financials will also help when you consult with investment bankers and begin completing challenging SEC paperwork.
Prepare Management for Upcoming Changes
The possibility exists for changes to the internal structure of the company during and after an IPO. As your IPO plans firm up, you might inform key employees and upper management of your plans. You might need their assistance with putting IPO-like processes and protocols into place. Some recommend starting to treat your company as if the IPO has already happened.
However, this action depends on how your company operates. Based on your assessments, you might decide to wait until closer to launch time.
Consider All Legal Issues Related to Your Potential IPO
When assessing your business with an eye toward an IPO, review legal issues with your business lawyer or corporate counsel. Does the company face any potential problems that could worry future investors? Are all your paperwork and company records complete and up-to-date?
The legal implications of your IPO launch could be challenging to understand. Business attorneys typically will thoroughly review all legal documents and watch for areas that could cause problems in the future.
Ask for Help When Needed
In addition to your lawyer, you might need other professional advice. Build a team that can answer your questions, review your options, and provide in-depth information about your options. It’s usually best to take this step in the early stages of planning.
About the Author
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.