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
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).
an exit strategy – financially or personally.
- Requires complete management infrastructure with public
- Sarbanes-Oxley compliance ($400,000 - $500,000)