3 Ways You Can Access Public Markets

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.

1. CONDUCT AN INITIAL PUBLIC OFFERING (IPO)

Conducting an IPO provides your company with unmatched access to global markets, amplified visibility, and offers the following significant benefits:

BENEFITS TO AN IPO

Access to capital

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.

Deeper liquidity

Becoming publicly traded enables companies to access the equity markets via follow-on offerings and provide shareholders with the ability to manage their positions.

Visibility

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.

New public currency

Companies can use their new public shares as a dollar-denominated currency for overseas expansion, acquisitions, and stock-based compensation for employees.

WHAT YOU SHOULD KNOW ABOUT IPOS:
  • The process leading up to your IPO is extensive and complex, but preparing early and thoroughly makes all the difference.
  • It’s important that your company has a strong and sustainable business model that will be able to withstand the challenges of quarterly reporting.
  • Have a clear strategy for the use of the funds raised during the IPO. Articulating the objectives, strategy and execution of your company’s IPO will be critical to meeting investor demands.
  • A few steps you can take in advance of your IPO include building out a board of directors 1.5 - 2 years ahead of time, planning for financial reporting a year ahead, holding mock earnings calls, establishing communications policies for your company and actively managing your online presence.
  • With 225 years of experience, our team at the NYSE has helped innovative companies from small-caps to mega-caps across all sectors successfully complete IPOs in a variety of market conditions.

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2. FORM A SPECIAL PURPOSE ACQUISITION COMPANY (SPAC)

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:

  • The proceeds from a SPAC IPO are deposited into a trust account. Once the trust account is funded, the SPAC’s management team has a set amount of time (typically 24 months) to identify and acquire an operating business with a value equal to the value of most of the cash held in the trust account. If the SPAC does not complete an acquisition within the required timeframe, it must liquidate and return the cash held in the trust account to its shareholders.
  • The SPAC IPO consists of units (typically shares and warrants). The units separate into the components shortly after the offering. On the NYSE, the securities will be traded by a Designated Market Maker (DMM) who has formal obligations to the security, including providing liquidity, improving quotes and encouraging market participation.
  • SPACs issued on the NYSE benefit from the strength of our network of listed companies, our unique market model and our comprehensive investor relations (IR) toolkit.
  • After the SPAC completes its acquisition, it benefits from the NYSE’s industry and sector expertise. The company’s industry peer group is here. Our statistics back up our sector expertise: 98% Energy/ Utilities, 93% Financial, 88% Industrials, 78% Goods/ Services, and 71% Healthcare.

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3. USE REGULATION A+ (REG A+)

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.

Learn More about Reg A+

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:

  • Minimizing IPO execution risk with our unique, proven market model – Our market model combines leading technology with human judgment to prioritize price discovery and stability for our listed companies. The result is that our companies experience 40% lower volatility on average than other U.S. exchanges on listing day.
  • Maintaining lower volatility – In addition to lowered volatility on IPO day, our market model offers up to 34% lower volatility during lock-up expirations, 35% lower volatility at daily opens and up to 39% lower volatility at daily closes.
  • Raising capital on a truly global platform with the deepest liquidity – Over the past decade, we’ve raised $375.7 billion in IPO proceeds, and we continue to be a world leader in global capital raised.
  • Gaining unmatched global visibility, brand awareness and prestige – Whether it’s a marketing activation in Experience Square outside 11 Wall Street, sharing your story with the 30+ media outlets that broadcast from the NYSE trading floor or accessing the 1.4 million people who follow us on Twitter at @NYSE, we can help you use our global visibility platform to drive real business results.
  • A leading network of peer companies across all sectors – We’re home to 98% of the Dow Jones Industrial Average, 78% of the S&P 500, 77% of Fortune 100 companies and 88% of the Ad Age 100.
  • Best-in-class IR services and networking opportunities – Comprehensive IR services for NYSE-listed companies include direct access to a NYSE Designated Market Maker, the NYSE Connect market data mobile app and desktop, access to our private IR community and summits, detailed ownership insights and investor targeting tools, leading website design solutions and quarterly earnings webcasting, communication tools through, social media partnerships and more.