Effectiveness and the Post-Effective Period

After the end of the road show, during which time the underwriters have solicited in- terest in the offering, the company requests that the SEC declare the registration statement effective so that its sales can be made pursuant to the registration statement. If all issues have been resolved, the SEC will declare the registration statement effective. Afterward, on the day effectiveness is declared, the underwriters and the company hold a pricing call where the underwriters recommend to the company the price at which the underwriters will purchase the stock from the company for resale to the public. Prior to or during the formal pricing call, the underwriters, to different degrees, provide the company with indi- cations of the investors’ interest and other relevant market data indicating the appropriate price range for the company’s stock to ensure a successful offering. On the pricing call, a committee of the board, the Pricing Committee, formally approves the price at which the stock will be sold to the underwriters for resale to the public, usually giving significant consideration to the underwriters’ recommendation. After the pricing call, the underwrit- ing agreement is executed and, either that night or before the market opens the following day, a press release announcing the terms of the offering is issued. The next day the under- writers sell the company’s stock to investors and trading in the company’s stock begins. Chapter 9 provides a Pricing Schedule that highlights in more detail the concluding events to a successful IPO.

After the IPO, the company must comply with various governance and compliance requirements (whether from the SEC, NYSE or Nasdaq) and the reporting and other regu- latory requirements of the Exchange Act. During the IPO process, the company will make arrangements in order to comply with these requirements, some of which must be met at the time of initial filing of the registration statement and others at the time the company goes public. Chapter 10 provides a more detailed discussion of these governance and com- pliance requirements, as well as the reporting and regulatory requirements.


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