IPO Initial Public Offerings
Information on Going Public
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IPO Planning: The steps involved prior to the IPO Filing process.
The "pre IPO" phase that attends before the IPO filing is intended to ensure that
nobody associated with the IPO will unduly promote it before it has been deemed
valid by the Securities and Exchange Commission. This IPO planning process protects
investors in the sense that a security is not deemed fully credible prior to its
validation by the SEC. It also protects the IPO's potential competitors since it
restrains anyone associated with the IPO from building media "buzz" or engaging in
any preferential trading activities. As a result, the pre IPO period is thought of
as part of the Securities and Exchange Commission's mandate to ensure all new IPO
plans are completely legitimate.
There are two quiet periods that take place when preparing for an Initial Public Offering.
The first one takes place after the filing of the S-1 form, the main document associated
with a filing for SEC recognition. After this filing, a quiet period immediately begins
and does not end until the SEC has declared the registration acceptable. As such, the
company needs to have a prospectus on file for potential investors to review. Company
executives, potential issuers, analysts and others with favorable access to the details
of the filing are all restrained from discussing the details of the IPO at this time.
When the company finally submits its IPO plan, after the public offerings first day of
public trading, another quiet period goes into effect for 40 calendar days. During that
time, underwriters and analysts who are affiliated with the IPO plan are not permitted
to make any earnings forecasts or other major public statements regarding its future
profitability. This tends to be the most uncomfortable part of the IPO filing, since the
public perception of the IPO may ebb and flow during this time and there is little that
anyone associated with the offering is legally permitted to do about it.
Although there are other quiet periods that can be activated upon certain unusual conditions,
the two periods described above are those that every IPO will face. During these periods, the
stock price and its projected outlook can be quite volatile. It is a good idea to ensure
that strong publicity is built up before and after each quiet period.
For information about the IPO planning process please
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