Читать книгу Reading Financial Reports For Dummies - Lita Epstein - Страница 66

After the company and the investment banker agree to work together and set the terms for the public offering, as well as the commission structure (how the investment banker gets paid), the banker prepares the registration statement to be filed with the SEC.

After the registration is filed, the SEC imposes a “cooling-off period” to give itself time to investigate the offering and to make sure the documents disclose all necessary information. The length of the cooling-off period depends on how complete the documents are and whether the SEC asks for additional information. During the cooling-off period, the underwriter produces the red herring, which is an initial prospectus that includes the information in the SEC registration without the stock price or effective date.

After the underwriter completes the red herring, the company and the investment bankers do road shows — presentations held around the country to introduce the business to major institutional investors and to start building interest in the pending IPO. A company can't transact sales until the SEC approves the registration information, but it can start generating excitement and getting feedback about the IPO at these meetings.

When the SEC finishes its investigation and approves the offering, the company can set an effective date, or the date of the stock offering. The company and investment bankers then sit down and establish a final stock price. Although they discuss the stock price in initial conversations, they can't set the final price until they know the actual effective date. Market conditions can change significantly from the time the company first talks with investment bankers and the date when the stock is finally offered publicly. Sometimes the company and investment banker decide to withdraw or delay an IPO if a market crisis creates a bad climate for introducing a new stock or if the road shows don't identify enough interested major investors.

After the stock price is set, the stock is sold to the public. The company gets the proceeds minus any commissions it pays to the investment bankers.