How to take private company public?


S

Sam

Not sure if this is the correct forum, if not I apologize.

I need to write a paper for a graduate course on the process, risks
and rewards associated with taking a private company public and I am
looking for resources to learn about that process.

Can anyone suggest a place to start learning about how to do this? A
website, forum, books?

I have been scouring the internet looking for information and thought
maybe you guys might be able to point me in the right direction.


Thanks,

Sam
 
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C

camgere

Not sure if this is the correct forum, if not I apologize.

I need to write a paper for a graduate course on the process, risks
and rewards associated with taking a private company public and I am
looking for resources to learn about that process.

Can anyone suggest a place to start learning about how to do this? A
website, forum, books?
An easy read intended for the general public is "Own Your Own
Corporation" by Garrett Sutton. Chapters such as :"Organizational
Steps for Formaing a Corporation, Limited Liability Company and
Limited Partnership", "The Importance of Corporate Formalities" and
"Raising Money" should help. "Guide to Investing" by Robert Kiyosaki
can put this information in context. Read the following chapters:
"The Accredited Investor", "The Qualified Investor" and "The Inside
Investor". The idea is to sell and own IPO shares from the inside (at
near zero owner cost) rather than buy them on the outside. Your local
library probably has these.

For your paper you will want to quote "Harvard Business Review",
Fortune 500 CEOs and nobel prize winning economists. The more
incomprehensible the advice, the more sophisticated, advanced and
incredibly intelligent it seems. Use lots of jargon and advanced
mathematics.

Please don't give me your opinion of these books unless you have
actually read them recently.

Good Luck on your paper.
 
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T

Tad Borek

Sam said:
I need to write a paper for a graduate course on the process, risks
and rewards associated with taking a private company public and I am
looking for resources to learn about that process.

Can anyone suggest a place to start learning about how to do this? A
website, forum, books?
Sam, as I'm sure you know there are a lot of pieces to this. Maybe
approach it by pretending you have a company that's up and running, and
you want to do an IPO...what do you do? In a nutshell, you need to
create stock, set a price for it, and find a way to distribute it to
investors who are willing to fork over cash. The risks are that you get
a lousy price, don't raise enough cash for your needs, and/or give up
too much ownership. The principal rewards are obtaining cash for the
business, providing a mechanism (the stock market) for easy & cheap
liquidation of ownership stakes for founders and investors, and
providing currency (stock) that can be used for compensation of
employees and executives. Plus it pays a lot of lawyers & bankers really
well, and oils the gears of retail brokerage firms, let's not forget
that piece.

So just add to that and you have your paper! =)

My suggestion is to take a stroll over to a law library and spend a few
hours with a legal practice guide on Securities Law, and a
corporate-finance text book. This will give you an idea of the questions
raised and legal requirements for the IPO process (Securities Act of
'33, "blue-sky" laws, etc). Securities are heavily regulated and there's
a web of federal and state laws that need to be complied with. If you
understand the legal side of it much of the rest falls into place.

As part of that process a lot of financial questions are raised and
that's the role of the investment bank(ers). The issue of how to value a
company, determine the right capital structure, and how much cash to
raise. Again, hit the library, there are literally hundreds of books on
this process. On the internet I can't imagine you'll find enough to
write a grad-level paper.

I think fewer people would buy IPO stocks if they learned more about
this process. The valuation step, in particular, has so much slop in it,
and the process is so fraught with "agency problems," that IPOs deserve
a good bit of distrust, from the perspective of the individual investor.

-Tad
 

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