5 Steps in the Initial Public Offering Process

  • By: Josh Palmer
  • March 27, 2024
Reading Time: 3 minutes

Is your business ready to go through an initial public offering (IPO)? Listing shares on the public stock market is an exciting time for fundraising, advertising, and building your company’s prestige. Of course, part of the reason it is such a momentous occasion is that companies cannot just dive into their initial public offering. It takes a great deal of preparation, going all the way back to the first startup board meeting, to get the best possible result from an IPO.

The day you offer shares to the public is the day your financial future and business governance are set. In order to gain the most benefit and long-term prestige from your IPO, it’s important to go through the proper steps.

What is an Initial Public Offering?

An initial public offering (IPO) is the process by which a private company becomes publicly traded by offering its shares to the general public investors on a stock exchange for the first time. This allows the company to raise capital by selling ownership stakes to investors. 

During an IPO, the company works with investment banks to determine the offering price. This price is typically based on financial factors such as the company’s financial performance, growth prospects, and market conditions.

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Initial Public Offering Process

The process for a company’s initial public offering includes the following steps. 

1. Preparation and Due Diligence

For due diligence, your company should undergo a full audit of all finances, processes, and regulation compliance. The financial audit not only ensures everything is being done by the book, but also highlights areas for improvement, such as accounts that should be resolved, unclaimed opportunities for revenue, and financial routines that could be made more efficient.

The operational audit should review the efficiency of each department, the transparency of record-keeping, and opportunities for improvement. The compliance audit will look at how well your company adheres to every regulation applied to your industry, sector, business model, facilities, and location. Safety, security, privacy, and information handling will all be reviewed.

Any problems discovered in due diligence must be resolved before your IPO to ensure full legal preparation.

2. Filing the Registration Statement

Having completed the due diligence phase and met all SEC requirements, you will be able to file your registration statements with the SEC.

There are two parts to your registration statement. The first is the prospectus. This is a summary of the company’s information that must be provided to anyone who might buy shares in the company. 

It should include information on:

  • Business operations
  • Financial condition
  • Results of operations
  • Risk factors
  • Management structure and policies

Part two is the section that is only filed with the SEC, also known as Form S-1. Form S-1 is used to register security offerings. Because an IPO is ultimately a large sale of business securities in the form of stocks, Form S-1 is required.

3. Marketing and Roadshow

Marketing efforts help increase demand, ensuring shares to sell for the highest possible price. To build hype for the IPO, companies enact marketing strategies and conduct a roadshow to showcase their business to potential investors across various cities. 

The roadshow aims to generate interest in the IPO and secure commitments from investors to purchase shares. Marketing tactics include social media, press releases, and other promotional activities to generate buzz and attract  investors.

4. Setting the IPO Price

Setting the price of shares for your IPO is done in partnership with an investment bank. This price should be perfectly balanced to accomplish 3 things:

  1. Represent the value of a percentage of your company, based on the number and division of shares
  2. Entice shareholders to get in on the first day, when your shares may be at the most profitable buy-in price
  3. Mark your prestige by the price that people are willing to pay for your shares

5. Trading Begins

Finally, you reach the day of your IPO when your shares are released on the market, and public trading begins. This is a big day and should be celebrated by your company.

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OnBoard’s comprehensive set of board management tools ensures your board operates with a future-ready blend of human expertise and technological advancement from the first day your business goes public, or even before. Discover the potential of OnBoard for yourself by starting with the Board Meeting Minutes Template, or dive right into the software platform with its full set of board and meeting management features.


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About The Author

Josh Palmer
Josh Palmer
Josh Palmer serves as OnBoard's Head of Content. An experienced content creator, his previous roles have spanned numerous industries including B2C and B2B home improvement, healthcare, and software-as-a-service (SaaS). An Indianapolis native and graduate of Indiana University, Palmer currently resides in Fishers, Ind.