The Process Overview of A Direct Public Offering
Both time and money are required to under go an initial public offering or a direct public offering. When a company wants to file for an initial public offering, an underwriter is required to complete the process which is not the case for direct public offering. While an IPO may be a long process that can take as much as a year to complete, a direct public offering needs only a period of 90 days to complete the whole process using an S-1 form. The securities are created using an S-1 form then once the s-1 is approved a Form 10 registration must be completed to before the company can began trading.
To make a direct public offering successful, time and money are not the only factors to that are important. Besides these two critical factors, going to a reputable securities attorney is also a key part of the process. Its best to start planning the for an offering well ahead of time by hiring an executive advisor to help you align your company with all the proper professionals and assistance with putting together all of the needed documentation. A company should also prepare for the audit process and develop a plan of action.
Put Together The Right Team For Your Direct Public Offering:
When a company decides to go public via the direct public offering process, it requires a combination of professionals to include a transfer agent, a DTC participant, an auditor as well as an accountant and one market maker who would be responsible for sponsoring. Besides these team players, the primary shareholders or the seed shareholders are also needed to complete the process.
Filing the Registration Form with SEC:
To go public, the company first needs to complete the registration process by filling an S-1 registration form with the Securities and Exchange Commission (SEC).
This form includes a prospectus which includes all the details regarding the offering and all the information regarding the company including its business model, shareholders etc. This prospectus is an important document that is needed to raise capital during the public offering of the company.
Details of the information enlisted in the prospectus:
• Business Summary: this summary is the detail ed overview of the company, such as: products and services and how it operates etc.
• Financial Summary: the financial summary shows the company’s financial position and includes the income statement and the balance sheet of the company.
• Risk Factors: Give the details of all the risks that are associated and should be known before investing in the company. These risks include the economic, market and competitor risks.
• Management and Compensation: The overview of the whole managing team and the list of shareholders are mentioned in this section.
• Stock Offerings: This section is designed to give the complete details regarding the whole offering, costs, returns and maturity periods etc.
• How the earnings would be utilized is also mentioned in the prospectus.
• In the end, the overview about the company’s current position is given by the Management.
These S-1 forms are then evaluated by the SEC’s Division of Corporate Finance. During the reviewing process, the company should immediately respond to any query raised through its Executive Advisor or Public Attorney.
If any changes are suggested by SEC they should be made and the statement should then be modified accordingly. When the representative of SEC gets fully satisfied with the registration form, they approve it as an effective registration statement.
This approval of registration form makes a company responsible to report all its activities to the SEC. If you want to make a successful Direct Public Offering, only a trained and experienced going public Advisor and Attorney can help you do so by guiding you properly. Companies should know what their priorities are and should work with seasoned professionals rather than taking the advice of inexperienced lawyers or consultants.