Understanding IPOs – When should a company go public? – (8)

When should a company go public?
There is no right answer or right time. It depends on a company’s need for cash or liquidity to pursue its strategic plans. There is a market consensus that there is a “window” when companies, often particular types of companies, can effect IPOs. Whether the window is open or closed depends on overall economic conditions and investor appetite for risk. For example, in the dotcom boom of the late 1990s, many technology companies had ideas but no revenues and certainly no profits. SPACs became popular in the 2000s because, unlike blind pools before them, public investors in the SPACs had rights to approve the proposed acquisitions and the IPO proceeds had to be returned if a suitable investment was not found within a specified period, usually two years. After the dotcom bust and since the current economic downturn, investors are looking for companies with more revenues and actual profits or a relatively quick path to profitability.
What is the IPO process?
The public offering process is divided into three periods:
Pre-filing. The pre-filing period is the period from the determination to proceed with a public offering to the filing of a registration statement with the SEC. This is also generally called the “quiet period,” and a company is usually subject to limitations on its public communications. See “What is the quiet period?” and “What are“testing-the-waters” communications by or on behalf of an EGC?”.
Waiting or pre-effective. The waiting or pre- effective period is the period from the date of the filing of the registration statement to its

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