Pricing – What happens after the SEC has completed its review? – (65)

Pricing
What happens after the SEC has completed its review?
Once a registration statement has been declared effective and an offering has been priced, the issuer and the managing underwriters execute the underwriting agreement and the auditor delivers the executed comfort letter. This occurs after pricing and before the opening of trading on the following day. The company then files a final prospectus with the SEC that contains the final offering information. On the third or fourth business day following the pricing transaction (T+3 or T+4), the closing occurs, the shares are issued, and the issuer receives the proceeds. The closing completes the offering process. Then, for the next 25 days, aftermarket sales of shares by dealers must be accompanied by a final prospectus or a notice with respect to its availability. If during this period there is a material change that would make the prospectus misleading, the company must file an amended prospectus.
How is an offering priced?
In most IPOs, after the road show, representatives of a company and the underwriters will meet to price the offering. The initial public offering price will be determined based on the demand for the stock, current market conditions and the price range stated in the preliminary prospectus. If the number of shares will be significantly increased or decreased or the offering will not be priced within the range, a free writing prospectus is often issued at this point to make sure that investors have the necessary information before deciding to purchase the shares. Additional information will also be determined at this time, including the underwriters’ fees and commissions and the members of the

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