Testing service page

The traditional way to go public

The company will typically work with an investment bank to underwrite the offering, which means that the investment bank will help the company set a price for its shares and sell them to investors. Become a publicly traded company in the U.S. financial market.

  • Raise capital to grow your business
  • Making your shares available to the public

Transform Private company
into publicly traded

A traditional Initial Public Offering (IPO) is a process by which a private company goes public by offering its shares to the public for the first time. Here are six key points about a traditional IPO.

Preparation
  • Internal Assessment: The company conducts an internal review to ensure it is ready to go public. This includes auditing financial statements, improving corporate governance, and ensuring compliance with regulatory requirements.
  • Hiring Advisors: The company hires investment banks (underwriters), legal advisors, and accounting firms to guide the process.
Choosing Underwriters
  • Selection Process: The company selects one or more investment banks to underwrite the IPO. These banks help determine the offering price, buy the shares from the company, and sell them to the public.
  • Underwriting Agreement: The terms of the IPO are outlined in an underwriting agreement between the company and the underwriters.
Regulatory Filings
  • Filing with the SEC: The company files a registration statement (S-1 form in the US) with the Securities and Exchange Commission (SEC). This document includes detailed information about the company’s business, financials, and risks.
  • SEC Review: The SEC reviews the registration statement, often resulting in a back-and-forth process to address any concerns or deficiencies.

Achieving New Heights in the Public Market with a traditional Initial Public Offering (IPO)

When a company lists its securities on a public exchange, the money paid by the investing public for the newly issued shares goes directly to the company (primary offering) as well as to any early private investors who opt to sell all or a portion of their holdings (secondary offerings) as part of the larger IPO. An IPO, therefore, allows a company to tap into a wide pool of potential investors to provide itself with capital for future growth, repayment of the debt, or working capital. Let’s have a look at the key IPO terms that you must know.

The final price per share determined after the process of IPO in India.
Offer Price
Offer Price
Total value of shares ( Indicates fundraising amount ) being offered in the IPO.
Issue Size
Issue Size
Company shares are traded on a stock exchange and become accessible to investors.
Listing
Listing
Process where investors submit bids and the final price is determined based on demand.
Book Building
Book Building
A market where shares are listed and traded before the official listing.
Grey Market
Grey Market
Draft Red Herring Prospectus serves as the first official document filed with regulatory authorities.
DRHP
DRHP
Previous
Next

Traditional IPO Considerations

Additional Considerations
After the IPO, existing shareholders (like founders and early investors) may be subject to a lock-up period. This restricts them from selling their shares for a set time, usually 3-6 months, to prevent a sudden flood of shares hitting the market and depressing the price.
Once public, the company becomes subject to increased scrutiny from investors, analysts, and the media. They will need to be more transparent about their finances and operations, and their performance will be under constant evaluation.
Public companies often attract analyst coverage from financial institutions. Analysts issue research reports and recommendations on the stock, which can influence investor sentiment and stock price.

A traditional IPO is a significant milestone for a company, offering numerous benefits but also introducing new challenges and responsibilities. The process requires meticulous planning, significant resources, and strategic execution to ensure a successful transition from a private to a public entity.

Post-IPO
Considerations

A traditional IPO is a significant milestone for a company, offering numerous benefits but also introducing new challenges and responsibilities. The process requires meticulous planning, significant resources, and strategic execution to ensure a successful transition from a private to a public entity.

Maintaining Investor Relations
  • Transparent Communication: Regular, transparent communication with investors is crucial. This includes earnings calls, press releases, and investor meetings.
  • Managing Expectations: Setting realistic expectations and delivering consistent performance can help build and maintain investor trust.
Lock-Up Period
  • Insider Trading Restrictions: After an IPO, there is typically a lock-up period (usually 90-180 days) during which insiders and early investors cannot sell their shares. This helps stabilize the stock price by preventing a flood of shares entering the market.

Key Considerations:

Market Conditions

Companies often time their IPOs to coincide with favorable market conditions to achieve a higher valuation.

Valuation

Determining the right valuation is critical for balancing the interests of the company and investors.

Investor Relations

Post-IPO, maintaining strong investor relations is crucial for sustaining stock performance.

Going public for the first time

Taking your company to the next level

Build a company that is worth investing

Databoss assists companies in preparing the required documentation, meeting regulatory standards, and structuring the offering. They work closely with legal, financial, and marketing teams to ensure a smooth and compliant IPO process. 

Raise substantial capital from public investors, enhancing financial stability, and brand recognition. Attracting potential customers, partners, and employees.

Raise capital through Regulations

The traditional IPO process typically involves the following steps:

  1. The company files a registration statement with the Securities and Exchange Commission (SEC).
  2. The company engages an investment bank to underwrite the offering.
  3. The investment bank conducts due diligence on the company and establishes a price range for the shares.

Preparation and Underwriting

The company seeking to go public typically hires investment banks to serve as underwriters. The underwriters help the company prepare for the IPO, which includes due diligence, financial audits, and regulatory filings, most notably the S-1 registration statement with the Securities and Exchange Commission (SEC).

Valuation and Pricing

The underwriters work with the company to determine its valuation and set the initial offer price for the shares. This process involves analyzing the company’s financial health, market conditions, and demand from institutional investors during the “roadshow,” where the company presents its business model and financials to potential investors.

Roadshow and Marketing

A roadshow is conducted where company executives and underwriters present to institutional investors, such as mutual funds, pension funds, and hedge funds. The goal is to generate interest and gauge the market demand, which helps in setting the final offering price.

Going Public

On the IPO day, the company’s shares are listed on a stock exchange (e.g., NYSE, NASDAQ) and are available for trading by the public. The shares are sold to institutional and retail investors, and the company raises capital based on the number of shares sold and the offering price.

Traditional IPO

A traditional Initial Public Offering (IPO) is a process by which a private company goes public by offering its shares to the public for the first time. Here are six key points about a traditional IPO

Go Private to Public

Unlocking the Power of Public Markets with Databoss

“Working with Databoss was a game-changer for our company’s IPO. Their deep understanding of the market. Thanks to their guidance, we confidently navigated the complexities and achieved a highly successful public offering.”

Edward Kennedy
Director, Xeriant Inc.
Fawad

Client reviews

View all reviews
INSIGHTS

In-Depth Insights for Your Journey

20+

Years of experience

100%

Success rate

$500M+

Secured investments
FAQ

FAQs about paid search management

Looking to learn more about paid search management for your business? Browse our FAQs:

Answer: Preparing for an IPO involves several essential steps. These include evaluating capital-raising options early on, conducting an IPO readiness assessment, assembling a skilled team of external advisors, establishing financial infrastructure and corporate governance, and aligning with market expectations. It is a transformative process that requires early preparation spanning 12-24 months.
Answer: A pre-IPO readiness assessment helps identify gaps between market expectations and the organization’s current state. It ensures the company is market-ready in terms of systems, controls, accounting standards, and governance. Initiating this assessment as early as possible is recommended, as addressing the identified issues may take a year or more.
Answer: Going public has a profound impact on management and board dynamics. It requires increased transparency, accountability, and adherence to regulations. Boards must adapt decision-making processes, manage risk, and align objectives with investor expectations. Building a strong board with the right mix of expertise becomes critical to demonstrate commitment to effective governance.
Answer: Investors heavily consider financial factors such as debt-to-equity ratios, revenues, return on equity (ROE), profitability, and earnings before interest, taxes, depreciation, and amortization (EBITDA). Non-financial factors, like corporate strategy, brand strength, and corporate governance, also play a significant role in the decision-making process. Emphasizing profitability and presenting a compelling equity story backed by a strong track record of growth are vital to attract investor interest.
OUR SOLUTIONS