5. The Going-Public Process 51

Market perceptions of the risk inherent in a company’s stock are sometimes related to the per-share price. That is, a company that offers its shares at a price of $8 may be perceived to be offering a more speculative stock, while a $15 stock price may not be so perceived. At the other end of the spectrum, an IPO price of $25 may be considered overpriced.
In addition to the price, the number of shares offered should be sufficient to ensure broad distribution and liquidity.
Upon completion of negotiations with the underwriter — usually about the time the registration statement is ready to become effective and the road show schedule is over — the underwriting agreement is signed by authorized representatives of your company and the underwriter. Also at this time, the final amendment to the registration statement is prepared, including (as applicable)
the agreed-on offering price, underwriter’s discount or commission, and the net proceeds to the company. This amendment is called the price amendment and is filed with the SEC.
In an effort to simplify the filing requirements associated with the final pricing amendment, the SEC passed a rule allowing companies to omit information concerning the public offering price, price-related information, and the underwriting syndicate from a registration statement that is declared effective. In such cases, the information omitted would either be included in the final prospectus and incorporated by reference into the registration statement or included in a post-effective amendment to the registration statement.
If the staff of the SEC’s Division of Corporation Finance has no important reservations with respect to the registration statement, your company and underwriter will customarily request that the offering be declared effective immediately — referred to as requesting acceleration. If acceleration is granted, the underwriter may proceed with the sale of securities to the public.
The offering
7 DAYS AFTER THE OFFERING – Holding the closing meeting
The closing date — generally specified in the underwriting agreement — is usually within three to five business days after the effective date of the
registration statement. At closing, your company delivers the registered securities to the underwriter and receives payment for the issue. Various documents, including an updated comfort letter prepared by the independent accountant, are also exchanged.
TIP
There is no room in your new life as a public company for capriciousness in regard to your use of proceeds from your offering. Use proceeds on the items listed in the prospectus. If you do otherwise, you risk losing credibility for future financings and you may have to explain differences to the SEC.
PricewaterhouseCoopers LLP Roadmap for an IPO
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