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| Going public—transforming a closely held corporation into one in which the general public has proprietary interest—is indeed arduous. An entrepreneur must carefully assess whether the company is ready to go public as well as whether the advantages outweigh the disadvantages of doing so. In assessing readiness, the entrepreneur must take into account the size of the company, its earnings and performance, market conditions, urgency of monetary need, and the desires of the current owners. The entrepreneur needs to consider the primary advantages of going public—including new capital, liquidity and valuation, enhanced ability to obtain funds, and prestige—along with the disadvantages of expense, disclosure of information, loss of control, and pressure to maintain growth.
Once the decision is made to proceed, a managing investment banking firm must be selected and the registration statement prepared. The expertise of the investment banker is a major factor in the success of the public offering. In selecting an investment banker, the entrepreneur should consider reputation, distribution capability, advisory services, experience, and cost. To prepare for the registration date, the entrepreneur must organize an "all hands" meeting of company officials, the company's independent accountants and lawyers, and the underwriters and their counsel. A timetable must be established for the effective date of registration and for the preparation of necessary financial documents, including the preliminary and final prospectus. After the registration and review of the SEC, the entrepreneur must carefully observe the 90-day quiet period and, in the case of certain smaller companies, qualify under the blue-sky laws of each state in which the securities will be offered. After the initial public offering, the entrepreneur needs to maintain a good relationship with the financial community and to adhere strictly to the reported requirements of public companies. The decision to go public requires much planning and consideration. Going public, indeed, is not for every entrepreneurial venture. |