Initial Public Offering Advisory

The term "going public" refers to a company’s initial sale of its securities (usually common stock) to the general public. It is accomplished by registering securities with the federal Securities and Exchange Commission and state securities commissions and hiring an underwriter to sell them to the general public. Going public is a goal of many companies enabling them to raise money, provide liquidity for the subsequent sale of stock, and create an ascertainable market value for shares.

Going public requires a great deal of consideration of a number of factors including timing, company history, profitability, sales, prospects for the future, company and industry growth, and management personality. The advantages and disadvantages of going public should be weighed carefully before making a decision.

Among the advantages management should consider:

• Lower cost of capital
• Increased shareholder liquidity
• Enhanced ability to grow through expanded capital opportunities
• Improved company image

The advantages of going public are substantial, but can be easily outweighed by the disadvantages. Each situation depends on management’s goals and circumstances surrounding the company.

Among the disadvantages management should consider:

• Additional expense associated with regulatory and public reporting requirements
• Loss of confidentiality and management control
• Periodic financial reporting
• Pressure from shareholders to enhance share value
• Restrictions on stock sales

Amvest analyzes the advantages, disadvantages, and alternatives to an initial public offering. If the decision is to proceed, Amvest assists in preparing the company for the IPO. Amvest provides pre-sale positioning service, which enhances a company’s salient features (see the section entitled "Pre-Sale Positioning" for more information). An IPO is not a decision to be made lightly or alone. The IPO process generally takes twelve months or longer and requires a serious financial and time commitment by the senior management team. The process for a secondary public offering is similar, but includes additional regulatory items.