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2 years ago
What is an IPO?  What type of companies should go public?  Outline the advantages and disadvantages of an IPO.  Also, outline the steps a company should follow in taking a company public.
Textbook 
Essentials of Entrepreneurship and Small Business Management
Edition: 6th
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2 years ago
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An initial public offering (IPO) is how a company raises capital by selling shares of its stock to the general public for the first time.
Companies attempting an IPO should have a strong record of earnings, a consistently high growth rate, a three- to five-year record of audited financial statements, a solid position in a rapidly growing market, a sound management team, and a strong board of directors.

Advantages include:
•   Ability to raise large amounts of capital
•   Improved corporate image
•   Improved access to future financing
•   Attracting and retaining key employees
•   Using stock for acquisitions
•   Listing on a stock exchange

Disadvantages include:
•   Dilution of founder's ownership
•   Loss of control
•   Loss of privacy
•   Reporting to the SEC
•   Filing expenses
•   Accountability to shareholders
•   Pressure for short-term performance
•   Timing

The key steps in taking a company public include:
•   Choose the Underwriter
•   Negotiate a Letter of Intent
•   Prepare the Registration Statement
•   File with the SEC
•   Wait to Go Effective
•   Meet State Requirements
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