Going Public? A Comprehensive Guide to IPOs.

Posted on 12-07-2016 by
Tags: SEC , NYSE , Guide , Lexis Practice Advisor , NASDAQ , Practice Insights , IPO , Securities

Lexis Practice Advisor provides an overview of initial public offerings of equity securities, as well as detailed practice notes, forms and checklists on this topic.

Under the Securities Act of 1933, as amended (Securities Act), any offer or sale of securities must either be registered with the U.S. Securities and Exchange Commission (SEC) or qualify for an exemption from the registration requirements.

The process by which a company offers and sells its securities, usually common stock, to the public for the first time in an offering registered with the SEC is typically referred to as an initial public offering (IPO).

The IPO process is a relatively time-consuming and complex one that requires the cooperation and coordination of the issuer, the underwriters, their counsel, and other parties such as accountants. The IPO process includes, among other things:

  • Preparation of the registration statement, including a prospectus, to be filed with the SEC
  • Preparation of financial statements of the issuer’s accountants
  • Due diligence review of the issuer by the underwriters and counsel
  • Preparation of transaction documents, including the underwriting agreement and closing documents

Upon consummation of a typical IPO, the issuer will list its stock on a national securities exchange, such as the New York Stock Exchange (NYSE), or one of the NASDAQ stock markets (NASDAQ), and will become subject to ongoing public reporting and disclosure obligations under federal securities laws.

Counsel should be aware of the federal laws and requirements for an IPO, as well as the requirements and expectations of the underwriters and other offering participants. The following resources provide guidance for all aspects of an IPO, from the initial preparation stage to the closing of the transaction.

Overview of the IPO Process

The following resources provide an overview of the IPO process, including notes on initial client preparation and checklists on timing for the transaction. Also included is special guidance for emerging growth companies (EGCs), foreign private issuers (FPIs) and special purpose vehicles.

Stock Exchange and Listing Requirements

After completion of a typical IPO, the issuer will usually list its securities on a national securities exchange such as NYSE or NASDAQ. The following resources set out the listing requirements of the national securities exchanges, as well as the over-the-counter (OTC) market.

Due Diligence

The following resources provide guidance on the due diligence process for an IPO.

Registration Statement and Prospectus

The following resources provide guidance on drafting the registration statement and included prospectus. Drafting the registration statement and prospectus is one of the most important and time-consuming aspects of an IPO. Counsel should familiarize themselves with the requirements of each section of the prospectus, particularly the business, management’s discussion and analysis (MD&A), and risk factors sections.  

SEC Review and Communications

The following resources provide guidance on the SEC review and filing process, including practical guidance on responding to comment letters and submitting confidential treatment requests.

IPO Communications

The following resources provide guidance on permitted communications during the IPO process, including related materials on use of free writing prospectuses, road shows and research.

Issuer Resolutions and Approvals

The following resources relate to various issuer resolutions and consents required to approve the IPO.

IPO Transaction Documents

The following resources relate to the preparation of the agreements necessary to execute the IPO. The key transaction agreement for an IPO is the underwriting agreement, which sets out the terms on which the underwriters will underwrite the IPO. Most of the other transaction documents, including comfort letters, opinions, and other closing documents are required pursuant to provisions set out in the underwriting agreement.

FINRA Regulations

The following resources provide an overview of the requirements of the Financial Industry Regulatory Authority (FINRA), which provides regulations on the underwriters participating in the IPO.

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