Global public markets offer access to trillions of dollars of growth capital, which companies can leverage to stimulate innovation, invest in growth, foster entrepreneurship and drive job creation. And for investors and founders, there’s the added benefit of unparalleled liquidity. Depending on the type of company you’re leading, you may choose to enter the public markets differently depending on the unique needs of your business. Here’s an overview of three ways companies can access the public markets.
Conducting an IPO provides your company with unmatched access to global markets, amplified visibility, and offers the following significant benefits:
BENEFITS TO AN IPO
IPOs are the most common form of accessing funds for companies seeking working capital for organic growth, product expansion, debt repayments, acquisitions, and employee retention among other purposes.
Becoming publicly traded enables companies to access the equity markets via follow-on offerings and provide shareholders with the ability to manage their positions.
During the IPO and as a public company, the company will receive attention from the media, research analysts, institutions, and other key parties in the financial and public markets. This visibility opens doors to new investors and new customers.
Companies can use their new public shares as a dollar-denominated currency for overseas expansion, acquisitions, and stock-based compensation for employees.
A SPAC is a company formed for the purpose of raising proceeds through an IPO and using those funds to acquire an operating business. Experienced management teams (e.g., industry veterans or private equity experts) find an attractive acquisition target and complete an acquisition, which results in a publicly traded company.
WHAT YOU SHOULD KNOW ABOUT SPACS:
In 2015, the SEC adopted final rules implementing Title IV of the JOBS Act by amending SEC Regulation A to create new exemptions from registration for securities offerings by private companies. Described as Reg A+, the amendment is aimed at making it easier for smaller, earlier stage companies to access capital funding. Through Reg A+, a U.S. or Canadian company can raise up to $50 million in a 12-month period using a “public solicitation” of its shares and have the offering be exempt from SEC and state securities law registration. Furthermore, a company can confidentially submit its offering memorandum to the SEC and enjoy the opportunity to “test the waters.” Using Reg A+ offers a streamlined, expedited review process where the company is required to make its offering memorandum public just 21 days before SEC qualification and the beginning of its roadshow.
WHAT YOU SHOULD KNOW ABOUT REG A+:
A company looking to go public through Reg A+ will need to assemble a team of professionals for IPO preparation. At minimum, that team will include: company counsel, independent auditors and consulting accountants, underwriters, underwriters’ counsel, transfer agent, and other advisors and service providers for certain aspects of the IPO process.
The company will need to submit an offering memorandum to the SEC for approval for distribution to offering participants. Non-accredited investors may participate in a Reg A+ offering.
Companies that intend to list after a Reg A+ offering will need to ensure they raise a sufficient amount and take other actions that allow the company to meet all listing requirements. In many cases companies will qualify for listing even if the amount raised is less than the $50 million maximum offering size permitted under Reg A+. Once listed, companies are required to comply with the rules applicable to listed companies, including filing annual reports on Form 10-K and quarterly reports on Form 10-Q with the SEC.
The NYSE’s global visibility platform and 225 years’ experience conducting successful IPOs offers a robust brand, a suite of important services, and marketing opportunities to companies looking to attract initial investors.
HOW NYSE SUPPORTS IPOS, SPACS AND COMPANIES LISTING AFTER A REG A+ OFFERING
Regardless of how you choose to access the global public markets, the NYSE offers unparalleled benefits to your company, including: