Tuesday, June 28, 2016

Do I Really Need to Hire Additional Attorneys to Handle My Business’s IPO?

The number of IPOs coming down the pipeline is on the rise after a very slow 2015. The U.S. economy seems to be improving, the market has come to grips with volatility in China and Greece, and there is simply a pent up demand for investment opportunities that is driving many companies to go public. So, what does it actually take to go public? And why do you need to hire legal specialists to handle your IPO? We’ll tell you.

Regulatory Compliance

The biggest hurdle to going public is complying with all the rules and regulations governing public companies. You may think that your business is already burdened by regulations, so your in-house or local counsel can surely handle a bit more red tape, but if you have yet to go public, “you ain’t seen nothing yet.”

Prior to an IPO, our firm helps clients get their structure, finances, and governance in the necessary shape. One of the big things this entails is preparing financial statements so that they meet all the necessary reporting requirements and do not expose the company’s leaders to criminal liability for fraud or misstatements. 

We provide detailed step-by-step guidance to officers and boards on the requirements of public ownership, including their continuing compliance obligations under state and federal securities laws and Sarbanes-Oxley.  

Preparing for the Market

Depending on what market you are entering, you will also have to meet different terms and conditions in order to be listed on that exchange. Each exchange has its own listing requirements, which include things like total market value, stock price, and the number of publicly traded shares and shareholders a firm has.

The standards also impose non-financial requirements as well. The New York Stock Exchange, for example, requires companies to “have and maintain a publicly accessible website” in order to be listed.

An experienced law firm is going to know what your businesses needs to do to get listed on the various exchanges without having to do a bunch of research to try and figure listing rules out on the fly.

Appealing to Investors

Just because your business is compliant with all the applicable laws, and meets the requirements for listing, does not mean that you are going to attract investors. One of the necessary middle steps to attracting investors is promoting your company to analysts, the media, and other taste-makers. Developing marketing materials that appeal to these audiences is critical, but doing so without having an attorney review them to make sure you are not violating any regulations, is a mistake. One small mistake in a brochure or press release can get your company in serious legal trouble.

Savvy investors are also going to want assurances that the company they are backing is well-managed, and is going to be a success. One way to signal that you are a serious business that is going to do what it takes to succeed as a public company is to hire quality advisors.

Hiring an experienced law firm to guide you through the IPO process is part of this signaling. Don’t let your choice of law firm hold you back. Invest your resources in the best advisors so the best investors will invest their resources in you.

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