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By: Arthur D. Robinson and Jonathan Ozner SIMPSON THACHER & BARTLETT LLP
SENIOR EXECUTIVES AND OWNERS OF PRIVATE COMPANIES considering an initial public offering (IPO), or of public companies considering a spin-off or carve-out IPO of a subsidiary, business unit, or division, are undoubtedly aware of the many benefits of an IPO.
These include:
But the path to a successful IPO is also fraught with significant costs and potential pitfalls. To create the best chance for a successful process, in-house counsel, with assistance from their outside IPO counsel, should be mindful of the following:
The U.S. securities laws place restrictions on a company’s ability to offer to sell its securities before filing a registration statement. The Securities and Exchange Commission (SEC) construes the phrase “offer to sell” broadly. Plan for these restrictions now by developing guidelines for public communications, such as content on the company website, press releases, interviews with executives, and speeches at industry conferences.
If the SEC views any of these communications as conditioning the market for an upcoming offering, referred to as gun-jumping, it can institute a cooling-off period by delaying the IPO. It may even require a company to include the gun-jumping communication in the registration statement. The SEC has, however, adopted rules allowing a company to continue to release factual (but not forwardlooking) information about its business in a manner consistent with past practice during the IPO process.
The general rule is that for the company going public, a registration statement must include:
In addition, depending on when a filing takes place, an issuer may also need to include unaudited interim financial statements for the most recently completed quarter or year-to-date period.
To read the full practice note in Lexis Practice Advisor, follow this link.
Arthur D. Robinson is the Global Head of Simpson Thacher & Bartlett’s Capital Markets Practice. Art advises investment banking and corporate clients on a wide array of corporate finance transactions, particularly in the areas of high yield, initial public offerings, and restructurings, as well as corporate governance issues. He has worked extensively in a broad array of industries, including energy, real estate, healthcare, technology, transportation, retail, and industrials. Art is recognized among the leading capital markets lawyers in the United States and the world by several publications. Jonathan Ozner is a Senior Associate in the firm’s Corporate Department , where his practice focuses on representation of issuers, private equity sponsors, and underwriters in a wide range of securities offerings, including offerings of high yield and investment grade debt securities, initial public offerings, follow-on and secondary equity offerings, acquisition financing transactions, and exchange and tender offers.
For additional information on on conducting an IPO, see
> PREPARING A CLIENT TO GO PUBLIC
RESEARCH PATH: Capital Markets & Corporate Governance > IPOs > Conducting an IPO > Practice Notes > Offering Mechanics
For an overview of U.S. securities laws, see
U.S. SECURITIES LAWS: AN OVERVIEW
To learn about the IPO due diligence process, see
MANAGING THE DUE DILIGENCE PROCESS FOR AN IPO