Listing your stock on a major exchange is no small task, and it’s not for the faint of heart. By publicly listing your company, you’re opening a can of worms most business owners would choose against. You become publicly accountable for every penny spent, and your investors are now your boss.
1. Choose an Investment Bank To Do The Heavy Lifting
To begin the process, you’ll want to court an investment bank such as JPMorgan Chase, Goldman Sachs, or Morgan Stanley. While your mind might trail to handling the paperwork yourself to avoid paying a commission, investment banks list companies for a living. Your success is all-but completely tied to having an investment bank agree to help you, as they’re more experienced and able to get potential buyers.
2. Meet With The Bank
After an investment bank agrees to assist with your listing process, you’ll want to meet with them to discuss terms of your IPO. During this time, you’ll discuss the guarantees that the investment bank will provide you with. There are several guarantees they can provide. For example, they can guarantee the sale of a certain percentage, or a best-efforts commitment that the bank promises to sell as much humanly possible.
3. Develop a Prospectus
After meeting with the banks, you’ll want to develop a prospectus so the investment bank can submit it for registration with the Securities and Exchange Commission (SEC). This will include what the money will be used for, management history, current or future legal issues, insider holdings, or anything else that shows investing in your business is a safe decision for investors.
4. Begin the “Red Herring” Process
During in this process, you’ll court potential investors with your prospectus draft. For example, you may want to contact a mutual fund manager or hedge fund managers. Finding the right initial investor could represent millions of dollars for your business, almost instantly.
5. Determine Your IPO Share Price
One of the final steps is to determine the price of your stock. Bank officials are the best individuals to decide what price you should list, as they’re incredibly experienced in this area. This will avoid a steep fall in price during your IPO, giving investors long-term confidence that your stock continues to be a safe investment.
6. Track Your Performance
Track the performance of your stock on release day. As more shares are purchased on the market, the price of your shares will go up. As shares are sold, the price will go down.
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