Initial Public Offerings: A Practical Guide to Going Public


Initial Public Offerings: A Practical Guide to Going Public leaves no stone unturned on the road to a winning IPO. With a wealth of insight straight from the IPO trenches, this book highlights the lessons of IPOs past, giving executives and their advisors concise, actionable guidance and detailed tools to help unearth potential minefields and engineer a smooth path to IPO success. These excerpts reveal just a fraction of the practical, hands-on advice to be found on every page:


This book brings together in one place the information that companies and their advisors need to know as they prepare for an initial public offering and the beginning of life as a public company. From David’s many years in the IPO trenches, he has heard all the questions that come up in the IPO process. These range from nuts and bolts “how to” questions, like what happens at the printer, to much more esoteric ones, like how does bookbuilding work—and everything in between. In this book, he shares his tremendous knowledge, and that of many others who contributed to this enormous effort, in a presentation that should help anyone in the IPO world perform better. In today’s tumultuous securities markets, it is more important than ever to be well prepared in order to increase the chances of successful IPO execution.

As a former SEC staff member, I believe that the insights contained in this book—including what the staff looks for in a registration statement, what to expect in the SEC comment process, what the staff’s role is (and is not) and how to interact with the staff—should significantly improve the experience for all involved. With a greater understanding of the process of going public and of working with the staff, companies will be better equipped to avoid the common pitfalls that slow down the review process and frustrate everyone.

As a private practitioner, I know that this book will be an invaluable resource for IPO companies and their advisors. Many of the problems we wrestle with in getting a company ready to go public can be avoided by just being sensitive to the issues from the very first days of the company’s life. Although skilled lawyers can fix most things if a company gets off on the wrong foot, the IPO process will be a lot smoother and more efficient if the company starts in the right direction. This book walks companies and their advisors through the essential steps of IPO preparation, from incorporation through the organizational meeting and beyond.

Above all else, this book should help to level the playing field, in terms of IPO information. Each company has only one IPO. While some companies bring an IPO veteran or two into management to help with the process, that is not always the case. Just the jargon of going public—green shoes, red herrings, FWPs, blood letters, institutional pots, the global settlement and the like—can overwhelm even the most capable and confident team. Now companies going through the IPO process will have a valuable resource to help them frame smart questions and make better decisions.

Successfully completing an IPO can be a career high point for everyone involved. With the information that David so generously shares in this book, we all should have a better chance of having that experience.

Meredith B. Cross
Washington, D.C.
Spring 2009

This Foreword was written by Ms. Cross when she was a partner in the Corporate Practice Group of WilmerHale. In April 2009, the Securities and Exchange Commission announced that Ms. Cross, who previously served as Deputy Director and Chief Counsel of the Division of Corporation Finance, would be rejoining the staff as the Director of the Division of Corporation Finance. This Foreword expresses views Ms. Cross held while she was in private practice and does not necessarily reflect those of the SEC, the SEC Commissioners or the staff.

Preface to the First Edition

Initial public offerings have a special allure in both the business world and popular culture. Many entrepreneurs—and the investors in their companies—aspire to an IPO, and the term “going public” conjures up images of wealth, success and excitement. Yet, despite widespread interest in IPOs, the actual process of planning for and completing a successful IPO is not well understood by those who have not been through it—and even seasoned IPO veterans will find that the process has changed significantly in recent years.

This book is designed to meet the market need for a straightforward and practical guide to—and explanation of—the IPO process. A handful of IPO-related guidebooks are available and several securities law treatises of prodigious length and complexity exist, but this book has a different purpose and approach:

  • By focusing only on IPOs, this book is of manageable scope and complexity.
  • This book is intended for C-level officers (chief executive officers, chief financial officers, chief accounting officers and chief legal officers) and board members of companies contemplating an IPO—and counsel to these companies. It should also be helpful to professionals in related fields, such as venture capital, private equity, accounting, investment banking and investor relations. Although the subject matter involves legal matters, this book is not legalistic. IPOs are grounded in the securities laws, but readers need not be securities lawyers. This book is more a conversation about the essential elements of the IPO process than a treatise packed with citations and securities law esoterica.
  • Important subjects that other IPO guides only touch on—or omit altogether—are covered in this book, including the key attributes of successful IPO candidates; accounting preparation; pre-IPO financial planning for executives; the sources and nature of corporate governance requirements; how to navigate through SEC review; and the actual workings of the underwriting process. This book also discusses special types of IPOs, such as “dual tracks,” IPOs by special purpose acquisition companies (SPACs), “Rule 144A IPOs,” cross-border IPOs, tracking stock IPOs, reverse merger IPOs, and IPOs by venture capital–backed, life sciences, buyout-backed, spin-off and post-bankruptcy companies.
  • The text of this book is interspersed with selected empirical data to address common questions that typically are answered with generalizations, if at all—for example, the duration of the IPO process from filing to closing, the prevalence of selling stockholders in IPOs, the prospectus sections that draw the most frequent SEC comments, the use of takeover defenses by IPO companies, the size of directed share programs, the typical number of directors and executive officers in companies going public, and the percentage of IPO companies that engage “Big 4” accounting firms.
  • Many chapters include IPO planning tips to help companies anticipate and address topics that otherwise might create problems or disrupt the IPO process. This book also includes sample checklists, questionnaires and governance materials for use in the IPO process. No legal form is truly turnkey, but these samples have been battle-tested in dozens of IPOs and should provide a solid starting point for both companies and their lawyers.
This book omits reproductions of the voluminous statutes, SEC rules and other public domain source materials that govern or affect IPOs. Legal matters are discussed to the extent appropriate for the book’s mission, but the Internet is a vastly more efficient, current and eco-friendly way for interested readers to access these materials.

IPOs have weathered cyclicality, market upheavals, regulatory reforms and occasional scandals to remain a fixture in the financing landscape. Last year marked the 75th anniversary of the enactment of the Securities Act of 1933, and the SEC turned 75 years old in June 2009. Change is constant in securities regulation, however, and the past seven years has been a period of unprecedented change. The Sarbanes Oxley Act of 2002 has had significant consequences for IPO preparation and public company life; the “global settlement” in 2003 separated the roles of investment bankers and securities analysts in the offering process; and the SEC’s “securities offering reform” of late 2005 modified fundamental aspects of the IPO process. New and expanded disclosure requirements—with a recent focus on executive compensation—combined with a seemingly inexorable expansion in accounting requirements, have lengthened the period of time typically required to prepare an IPO registration statement and complete SEC review.

The IPO market has also been affected by the increasing globalization of the capital markets and periods of economic uncertainty and market turmoil. More recently, a series of stunning collapses and takeovers of venerable financial institutions have roiled the financial markets and combined with a severe economic slump to prompt massive intervention by the federal government. The long term consequences of these events are yet to be seen.

More regulatory changes are on the way. As of this writing, the SEC appears determined to proceed swiftly on several compensation and corporate governance disclosure initiatives, and Congress is entertaining other legislative proposals. Although the exact contours of the securities regulation environment will continue to evolve, the themes underlying this book will no doubt remain relevant. 

David A. Westenberg
Partner, Corporate Practice Group
Boston, Massachusetts
September 2009

Preface to the Second Edition

A lot has changed in the capital markets and in the corporate world in general since the original publication of this book. Numerous developments over the past three years—originating from the SEC, Congress and the private sector—are having a substantial impact on IPO companies. Some of these developments reflect the continuation of well-rooted trends, but others were largely unanticipated. In addition to various new SEC and stock exchange rules and evolving market practices, important factors affecting the IPO landscape include:
  • the JOBS Act, enacted in April 2012, effects profound changes to the securities laws and has broad implications for pre-IPO companies and the conduct of IPOs;
  • the Dodd-Frank Act, adopted in July 2010 to overhaul aspects of the U.S. financial industry, also imposed several significant corporate governance, executive compensation and disclosure requirements on public companies generally;
  • the capital markets have continued to exhibit periods of turbulence (including the “flash crash” in May 2010 and the market volatility fueled by the downgrade of the U.S. credit rating in August 2011); and
  • the intense focus on executive compensation and corporate governance practices in public companies is increasingly felt by IPO companies.
This second edition of this book addresses these and other key changes of critical interest to IPO companies, lawyers and market professionals alike. Completely revised and substantially expanded, the second edition covers the impact of the JOBS Act on private company fundraising, pre-IPO activities, Form S-1 disclosure requirements and the IPO process; ongoing changes in corporate governance requirements; important developments in accounting preparation, SEC review and underwriting practices; and many other new and updated topics. The new edition also includes updated market data, IPO forms and planning tips to help ensure a smooth IPO in the post–Dodd -Frank Act, post–JOBS Act world.

With Congress continuing to play a major role in securities regulation and disclosure matters, and the SEC still in the midst of the rulemaking required by the Dodd-Frank Act and the JOBS Act, more changes affecting the IPO market are on the way. These will, of course, be addressed in future supplements to this book.

David A. Westenberg
Partner, Capital Markets Group
Boston, Massachusetts
October 2012