Company Going Public: Procedures to Follow

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When a company wants to go public the following procedure must be performed: •The first thing it does is hire an investment bank, which does the underwriting. Underwriting is the process of raising money by either debt or equity (in this case we are referring to equity). We consider the underwriters as middlemen between companies and the investing public. •The company and the investment bank will meet to negotiate the deal. Items usually discussed include the amount of money a company will raise, the type of securities to be issued and all the details in the underwriting agreement. •The deal can be structured in a variety of ways. For example, in a firm commitment, the underwriter guarantees that a certain amount will be raised by buying the entire offer and then reselling to the public. In a best efforts agreement, however, the underwriter sells securities for the company but doesn't guarantee the amount rose. •Investment banks are hesitant to shoulder all the risk of an offering. Instead, they form a syndicate of underwriters. One underwriter leads the syndicate and the others sell a part of the issue. •Once all sides agree to a deal, the investment bank puts together an offer document to be filed with the SEC. This document contains information about the offering as well as company info such as financial statements, management background, any legal problems, where the money is to be used and insider holdings. •The SEC then requires a cooling off period, in which they investigate and make sure all material information has been disclosed. Once the SEC approves the offering, a date (the effective date) is set when the stock will be offered to the public •Then Individual Deposit the same amount in the listed bank-branch and submit an application for getting stock. •Then Conduct a lottery to distribute the stock

Those who are not get the stock they refund there subscription fee within one month. •Those who got the lottery, stock will deposited in...
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