Initial Public Offerings are not exit vehicles for owner/managers. An IPO requires a fully staffed management team that can withstand the scrutiny of Wall Street analysts.  Additionally, the cost of compliance with Sarbanes-Oxley is prohibitive for most private companies.

Benefits of an IPO

• Enables the Company’s shareholders to retain equity.
• Some liquidity available for majority shareholders.
• Add-on acquisition(s) could be funded largely with “new currency” (public stock).

Drawbacks to an IPO

• Requires a minimum market capitalization of $200 million to have an active float with institutional following and investment.
• Substantial, upfront marketing/preparation costs ($500,000 or more).
• Not an exit strategy – financially or personally.
• Requires complete management infrastructure with public company experience.
• Sarbanes-Oxley compliance ($400,000 - $500,000)