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Top Ten Practice Tips By Experts: Initial Public Offerings

September 28, 2017 (3 min read)

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:

  • Liquidity for existing equity holders
  • Increased access to capital
  • Acquisition currency in the form of publicly-traded stock
  • Enhancement of a company’s profile


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:

  1. Develop a plan for public communications during the IPO process.

    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.

  2. Prepare company financial statements suitable for use in an IPO registration statement.

    The general rule is that for the company going public, a registration statement must include:

    • Two years of audited balance sheets
    • Three years of audited statements of income, cash flows, and stockholders’ equity

    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.

    Related Content

    For additional information on on conducting an IPO, see


    RESEARCH PATH: Capital Markets & Corporate Governance > IPOs > Conducting an IPO > Practice Notes > Offering Mechanics

    For an overview of U.S. securities laws, see


    RESEARCH PATH: Capital Markets & Corporate Governance > IPOs > Conducting an IPO > Practice Notes > Offering Mechanics

    To learn about the IPO due diligence process, see


    RESEARCH PATH: Capital Markets & Corporate Governance > IPOs > Conducting an IPO > Practice Notes > Offering Mechanics