The closing
The closing marks the conclusion of the IPO. In a firm
commitment offering, the closing typically occurs three
business days after the pricing. This period allows the
underwriters to receive payment from purchasers of the
stock in the offering. In a best-efforts offering, the closing
will occur after all the shares have been sold, or the
company and underwriters agree that selling efforts can
be concluded.
The closing is a formal meeting to exchange executed
documents, including certificates and legal opinions. The
closing is usually attended (in person or by phone) by the
company and its counsel, the lead underwriter and its
counsel, the registrar and transfer agent, and the auditors.
Among the actual exchanges that occur, the underwriters
wire the company immediately available funds for the
net proceeds of the offering, the registrar and transfer
agent record the stock, the stock sold is credited to the
underwriters’ accounts through DTC, counsel provide their
legal opinions, and the auditors give the underwriters a
second comfort letter as of the closing date, referred to as
the bring-down comfort letter.
