Any Texas corporation that wishes to make its first offering of stock to the public may find it helpful to review the process and prepare their firm for it as much as possible. Although the initial public offering of stock may bring a tremendous infusion of capital and could help to propel the company to the next level of success, it is an extensive and expensive process.
In 2002, the American congress passed the Sarbanes-Oxley Act, greatly altering the legal conditions under which an IPO could be initiated. The requirements imposed by legislation may be arduous to observe and costly to implement. Not only will a completely new level of internal governance be needed, but the stipulations of the law demand much better reporting than might have been expected. The fees for printing, listing and filing the IPO, in combination with the necessary legal and accounting services, can reach more than $2 million in an average offering. In addition, the underwriter of the IPO will usually receive 7 percent of the proceeds from the sale and a discount.
Although they are costly to conduct, an IPO brings with it the possibility of a substantial infusion of capital. The expenses of the offering may be offset by the proceeds from the sale of the stock. There are also a number of intangible benefits that come from going public, including new levels of publicity and the opportunities and access that come with them.
Complex business transactions such as IPOs may benefit from the input of a lawyer. Their familiarity with the ever-changing legislation surrounding business issues may be helpful as a corporation or individual attempts to accomplish their commercial goals while remaining in full compliance with the law.
Source: Inc, "How to Prepare a Company for an Initial Public Offering", December 17, 2014