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Understanding the IPO process

On Behalf of | Jul 9, 2017 | Business Formation & Planning

Florida entrepreneurs who have successfully built up new ventures may at some point consider turning their privately held companies into publicly traded companies. There is no rule as to when or why this may be done and it is certainly not the route for every business but it can have some advantages.

As CNBC explains, going public through the initial public offering process may provide a business with access to a lot of usable, liquid money. This allows the company to afford or financial substantial changes whether those be in expansion or basic infrastructure changes. Having stocks may also give a business more leverage during a potential acquisition or merger down the road. When it comes to recruiting new talent, especially at the management or executive level, the ability to offer stock options may help employers to win the employees they want and need to further their business growth.

When it comes to making the move to being publicly held, one of the important things to keep in mind is that transparency as much as actual profits may be important to key investors. During the process of preparing for an IPO, an investment bank will manage the underwriting and the road show via which major investors might be solicited and identified.

The Securities and Exchange Commission will eventually set the date for the IPO and the investment bank will manage the sale of the stocks, making its money on the profits received from selling the stocks relative to what it paid for them.