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From Advisors to Business, Inc. A successful public offering is a team effort that involves substantial commitment from management and a team of professionals they assemble to complete and file the required documentation. The team typically includes underwriters, attorneys, accountants, financial printers, public relations professionals, and transfer agents, each with a distinct role in the process. Management. Management serve three critical roles during the process: they assemble the team and initiate the process; they provide the factual basis for the offering document through interviews and document production; and they assist the sales process through a series of 'road show' meetings with underwriters, analysts and potential investors. In concert with the underwriters, who understand market sensitivities and how securities are sold, management also directs the development of the company's 'story' that distinguishes it in the marketplace and is reflected in the offering document. Management’s intimate knowledge of the company and its role in creating the success that makes the public offering possible make it the single most important member of the going public team. The 'road show' that follows completion of the offering document offers management the chance to sell the offering by presenting the company's story to the investment community. Underwriters. The underwriters are the next most important members of the going public team. They handle the actual sale of the company's securities and provide direction to the process of drafting and completing the company's offering document. Offerings are typically conducted by a team of underwriters selected by the lead underwriter chosen by the company. Sometimes companies select two underwriters to serve a co-leads. No two underwriters are the same. Some have better research capabilities in a company's industry. Others may have less research expertise but larger sales distribution capability or the ability to sell better to institutional investors. One key role of the underwriter, after completing the offering document, is to price the company's stock for the offering after analyzing the market and making comparisons to other offerings. The going public price is often the subject of extensive discussion between management and the underwriters before a price is fixed. Once a price is agreed, the lead, or managing underwriter, completes putting together the syndicate of underwriters who will market and sell the securities and orchestrates the 'road show' of company executives to sell the securities. Attorneys. Two sets of attorney's are involved in the going public process - attorneys for the company and attorneys for the underwriter. This team of professionals is primarily responsible for preparing the offering memo and assuring company compliance with the many federal and state securities rules and regulations governing the process. They typically prepare the first draft of the offering document and are responsible for completing the document in compliance with applicable securities laws after obtaining detailed input from management, the underwriters and the other professionals involved in the process. Going public and complying with post offering requirements is a complex and specialized process that requires experienced attorneys to guide and advise company management. Auditors. The company's accountants play an important role in preparing the company's financial statements in the form required by applicable securities laws. This often involves planning in advance of the public offering process to get the company's financial statements in form to meet the strict requirements of the federal securities authorities. Financial Printers. The offering memorandum must be printed to specific standards of the Securities Exchange Commission and must be accompanied by an electronic submission to the SEC’s Electronic Data Gathering Analysis and Retrieval System (EDGAR). The limited number of firms that specialize in meeting these requirements are used to working within the tight time constraints common to an initial public offering and offer facilities that provide confidentiality and working space to accommodate the typical public offering team. Public Relations Agents. Public relations experts are often, though not always, retained to assist management in keeping the public informed and interested in the company after completion of the offering. This often includes planning during the public offering stage and a long term relationship with the company afterward. Transfer Agents. Transfer agents keep and maintain the company's shareholder records, often taking this role over from an internal company officer. They are required for companies joining the NYSE or AMEX, and are highly recommended for OTC companies. Transfer agents also assist companies with shareholder correspondence and handle stock transfers. |
