Welcome to IPO's Guide
Board Of Trade Initial Public Offering Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Initial Public Offering of Shares to 20,000 Investors—Looking at IPO the “Real Way”
from:
Supposedly you have assumed the highest post of a certain corporate organization and at that time the corporation is now planning to incorporate new products that will be sold under its brand name and expand the business operation from regional to national coverage. Since you are now the corporate head executive, you need to do something to sustain new corporate plans under your administration.
The board of directors suggested two possible options to sustain new corporate plans. Since the corporation now generates profit due to successful business growth, you can use such profit to secure a corporate loan. The funds incorporated in the loan will be used in sustaining the plans for inclusion of additional products that will be offered to the public and possible expansion of your business operation. The corporation has the sufficient assets that can be used as a collateral or guarantee in case the loan will falter later on.
The next option that the board suggest may is the corporation going public, or to undergo the IPO or the initial public offering process. It refers to the first sale of the corporation’s common shares to interested public investors. The revenues that will be generated through IPO can be used to sustain new corporate plans without losing the essential assets of the corporation.
As the head executive, which of the two options will you choose? Are you willing to sacrifice the corporation’s asset by making it as the collateral for the loan? Although it will be a good idea (especially if the corporation follows the limited liability concept) to secure a corporate loan, it is not a good idea to lose the assets that the corporation have. Add to it the inconvenience of high interest rate applied to monthly repayments which can affect the performance of the corporation in terms of profit generation.
On the other hand, if you will choose to go on public, the chances of selling all your common shares is high because the process itself guarantees that the underwriters involved can attract potential investors. Though it may cost you more, the generated revenue will be guaranteed and the assets of the corporation will be protected as well.
Let us again put you in a situation wherein your corporation offers 15 percent off the prices of the common shares under IPO to about 20,000 investors and they are limited to receive 100 shares, what will happen? Will such price slash on the common share create damage to the corporation itself?
Before getting into IPO, you must be first knowledgeable of the laws that govern the process. Under the Federal Securities Act of 1993, a company or corporate entity with around 20,000 investors cannot have an IPO. Keep in mind that it is an initial public offering, but if a company has more than 300 investors, the issuance of common shares must be done in public, therefore it will not fall under the “initial” category anymore.
Another thing is that the number of shares being purchased or sold is completely irrelevant. For instance, a share of a certain company falls at about $90,000 yet the value of a share of many “stocks” trade is at $0.01. Thus, the value of 2 million shares will depend on several factors like if there are a total of 2,000,000 or 200,000,000 shares issued.
Whether 20 investors or 200 shares or even 200 million shares, understanding the laws governing IPO will help you see the process in the “real way”.
Board Of Trade Initial Public Offering Specific links
Board Of Trade Initial Public Offering News
Stocks to watch Wednesday: 3M, Caesars, Cisco - MarketWatch
Stocks to watch Wednesday: 3M, Caesars, Cisco MarketWatch By MarketWatch WASHINGTON (MarketWatch) — Among the stocks that could see active trade in Wednesday's session are 3M Co., Caesars Entertainment Corp. and Cisco Systems Inc. The initial public offering of Caesars Entertainment /quotes/zigman/1626530 ... |
VEGOILS-Palm oil hits near three-week high, USDA report eyed - Reuters
 Jakarta Globe | VEGOILS-Palm oil hits near three-week high, USDA report eyed Reuters * Palm oil to hover around 3115 ringgit -technicals * Malaysian exporters stop supplying palm oil to Iran -sources * Indonesia's Bumitama revives $160 mln Singapore IPO -sources (Updates prices) By Chew Yee Kiat SINGAPORE, Feb 8 (Reuters) - Malaysian ... Palm oil jumps |
Largely smooth sailing after a shaky start - Business Standard
Largely smooth sailing after a shaky start Business Standard “Speed is going to be the essence now,” the 1976-batch Bihar cadre IAS officer had said in one of his first public meetings on taking charge as chairman of the Securities and Exchange Board of India (Sebi). Just about 10 days to go before he completes ... |
Facebook IPO is good news for Zynga, Pandora, Groupon, too - Christian Science Monitor
 Christian Science Monitor | Facebook IPO is good news for Zynga, Pandora, Groupon, too Christian Science Monitor By Matthew Shaer / February 2, 2012 The Facebook IPO could be very good news for Zynga, the social gaming company. Here, the corporate logo for Zynga is seen on the board outside the Nasdaq Market Site in New York's Times Square. Facebook investors will be making a bet on Mark Zuckerberg Zuckerberg's 'Hacker Way' Not Profit to Guide Post-IPO Facebook Facebook files awaited initial public offering |
Futures Flat Ahead of Data, Green Mountain Coffee Earnings and Facebook IPO in ... - Forbes
Futures Flat Ahead of Data, Green Mountain Coffee Earnings and Facebook IPO in ... Forbes Nasdaq Mini (NDX) futures were last seen trading flat, with tech stocks bolstered by details surrounding Facebook's looming initial public offering (IPO). Speaking of which, Facebook filed for its much-anticipated IPO yesterday, with paperwork ... |