Going public
means entering a stock market.
For many owners of both small and large businesses, the decision to go public is a big one. Becoming a public company can have a wide range of benefits, but it also requires careful planning to make it happen in a timely and efficient manner.
Get Organized
Take careful stock of financial records and accounting. If there are any discrepancies in the books, the time to correct it is before initiating the process of going public. This can save time and money further along in the process.
Consult Advisers
Engage outside advisers, who can assess your business plan and financial situation objectively. Advisers will also be able to determine the best way to take your company public, whether through a traditional IPO (initial public offering) or a more streamlined DPO (direct to public offering), which removes the need to secure an investment bank or underwriter. If you opt for an IPO, you'll need to secure an investment banking firm's services once you complete an audit.
Complete an Audit
A complete financial audit is a necessary step before continuing with the process of going public. This involves an analysis of financial records, as well as computation of debts and assets held by the company.
Registration
To begin the actual process of registering as a public company, a business' owners must complete a registration statement and file it with the Securities and Exchange Commission (SEC). Following a review period, the SEC can choose to certify the business, allowing the process to continue.
Selling Stock
Preparing a stock offering is the final step in the process of becoming a public company. Stock should reflect the value of the business and have a ready market of investors who will become the new public owners. According to the 1934 Securities Exchange Act, a company must have at least 500 public share holders to be classified as public. If you are working with an investment banking firm, the firm will secure shareholders. If not, your business is responsible for finding buyers on its own.
Finally, register with a stock exchange and set a date on which your shares will be made available for sale through brokers. This puts your business into the public sector and allows the stock to be traded at will.
