| Author | Message | ||
| DJ (Godfather)
Junior Member Username: Godfather Post Number: 53 Registered: 11-2002 |
I had no idea it cost so much $$ to go public. I thought the whole purpose of going public was to raise funds not spend it..lol  | ||
| Ernesto (T88power)
Intermediate Member Username: T88power Post Number: 1485 Registered: 2-2001 |
The last IPO I was involved with had the following costs: Legal $250K Accounting $150K Printing $100K Transfer Agent $5K Misc $57K Underwriter $600K SEC/NASD Fees $30K Nasdaq Listing $75K Total $1.3 million And this does not even include consulting fees, travalling, etc etc. I agree that you can shave a lot of these costs and make it drop below the million... Ernesto | ||
| Mike B (Srt_mike)
Junior Member Username: Srt_mike Post Number: 184 Registered: 12-2002 |
I have to disagree that it costs "well over $1 million" to go public. It can be done for $200k, or as high as $400-500k. The variables are concrete, audited books from previous years, and of course the underwriters cut. The volume of shares is determined by -The price of the shares (usually under $20 but more than $10 - Tom is right, it's a touchy-feely feel-good price point) -The amount of the company you're selling -The value of the company If the market value of the company is $20mm, and you're selling half ($10mm), you want a price of say, $10/share, so you will isssue 1mm shares. These are just numbers out of the air, but you get the point. You can also sell shares in a private placement... a company does not need to be traded on the Nasdaq or NYSE to sell shares of itself. | ||
| TomD (Tifosi)
Advanced Member Username: Tifosi Post Number: 3599 Registered: 9-2001 |
historiclly most IPO's are issued at a price in the teen's (15-20)with share number being the variable. though this has changed a little recently. its more of a psycological level than anything else | ||
| Jason Williams (Pristines4)
Member Username: Pristines4 Post Number: 280 Registered: 12-2002 |
Thanks for your input Ernesto. Much appreciated. :-) Jason- | ||
| Ernesto (T88power)
Intermediate Member Username: T88power Post Number: 1482 Registered: 2-2001 |
The amount of the IPO is usually determined by a combination of how much money the company need/is trying to raise, the company's economics (sales, profits, debt, etc), and its backers (angels, investors, venture capitalists). The better your company's position, the higher the offer price can be thereby issuing less shares. It costs well over $1 million in paperwork and filing fees alone to go public, plus your company has to have a minimum in sales and net income (about $20 million / $1 million respectively) and very good growth prospects. It MUST have an experience management team and Board of Directors. If it doesnt, it has to get it. It is also very expensive to go public in terms of operational expenses b/c you have to hire a whole new crew of employees dedicated to dealing with investor relations, SEC, analysts, etc etc. Ernesto | ||
| Drstranglove (Drstranglove)
Member Username: Drstranglove Post Number: 271 Registered: 4-2003 |
Jason, Your questions are actually extremely complex to be sure, with many different factors coming into play. I would recommend going to the Library or Boarders and do some research there. DrS | ||
| John (Cohiba_man)
Junior Member Username: Cohiba_man Post Number: 74 Registered: 1-2003 |
The IPO is determined by how much money you need, its a fund-raising measure, and the volume of shares I believe is just your choice...maybe not...as I said, someone else could answer this question WAY better. | ||
| Jason Williams (Pristines4)
Member Username: Pristines4 Post Number: 279 Registered: 12-2002 |
Yes John, I'm 18. :-) Just curious as to how all that is determined. | ||
| John (Cohiba_man)
Junior Member Username: Cohiba_man Post Number: 73 Registered: 1-2003 |
Just a quick note, if I remember, you're a teenager and if you're trying to take that Pristine Performance company public its not a simple procedure, it costs BIG $$. As for the questions, I could answer them but I'm sure others could answer them much better, so I'll let them ;) | ||
| Jason Williams (Pristines4)
Member Username: Pristines4 Post Number: 278 Registered: 12-2002 |
Just curious about a few things: 1. When a company is trying to go public, how does it figure out the volume of shares that it will put on the market? 2. How is the IPO determined? Thanks guys, Jason- |