To get listed on the stock exchange, a private company needs to do an IPO.
To raise more money to invest, a company often tries to get listed on the stock exchange. This process, called underwriting, results in an initial public offering. The IPO is then sent to the Securities and Exchange Commission (SEC), which decides if the company can be listed on the market. Once the stock is listed, investors can decide if they want to buy shares.
Instructions
1. If you want your company listed on a stock exchange, choose an investment bank to do business with. The bank will handle most of the tasks of getting listed. Since you are trying to run a business, it is advantageous to work with the bank and let it deal with these tasks.
2. Meet with the investment bank's representatives and discuss the terms of the agreement. Specifically, they'll want to know what type of security you're offering. In this case, it's a stock. Then, you'll discuss the two types of guarantee they can give you. The first is known as a firm guarantee, where they promise to sell a certain amount of shares or compensate you for what they don't sell. The second and more popular of the two is called a best efforts agreement, in which they do the best they can to sell the stock.
3. Work with the bank to prepare your registration to the SEC. This registration includes insider holdings, information on management, what the money will be used for, any legal problems and any information that will make an investor feel more comfortable about investing.
4. Start talking to major investors. Ignore the small individual investors. Instead, you want to talk to mutual fund managers, hedge fund managers and other big-ticket investors. While the SEC is reviewing your registration, you want to get as many people excited about your stock as possible. While you don't have a release date yet, the stock can still gain a following so that when it is released, more people invest.
5. Discuss with the bank the price per share. It might seem best to have the stock priced high, because that will mean more money per share. But if it is too high, no one will invest. The bank will determine what the best price is to charge per share, based on how the market is performing.
6. Watch as the stock goes up and down on release date. Investors will buy and sell the stock as they see fit. If all goes as planned, money will begin to flow into the company and can be used to further expand the business.
