Business Model Essay
The Public Issue:The basic procedure for a new issueI. Obtain approval from the board of directors.II. The firm must prepare and file a registration statement with the SEC.
: A carefully prepared set of documents, including aprospectus, which is filed with theSECprior to aninitial public offering.III. The SEC studies the registration statement during a waiting period
. Duringthis time, the firm may distribute copies of a preliminary prospectus.A registration statement will become effective on the 20 th day after its filing unlessthe SEC sends a letter of comment suggesting changes. After the changes are made,the 20-day waiting period anew. …show more content…
. For IPOs intensive research and analysis are required.VI. Tombstone advertisements are used during and after the waiting period.31
Study notes By Zhipeng Yan tombstone Anadvertisementin a business newspaper or magazine, placed by aninvestmentbank , announcing anofferingand listing thesyndicatemembers.VII. Public offering and sale
: shortly after the last day of the registration period.In a typical firm commitment contract
, the underwriter buys a stipulatedamount of stock from the firm and sells it at a higher price. The selling groupassists in the sale.VIII. Market stabilization: usually 30 days after the offering. The underwriterstands ready to place orders to buy at a specified price on the market.2. Alternative Issue Methods:Two kinds of public issues: the general cash offer and the rights offer
Cashoffers are sold to all interested investors
, and right offers are sold to existingshareholders.
Equity is sold by both the cash offer and the rights offer, though almost all debt is sold by cash offer
All IPOs are cash offers. 3. Cash Offer:
Firm commitment offering
An arrangement in which an underwriter assumes the risk of bringing a newsecurities issue to market, by buying the issue from the issuer and guaranteeing saleof a certain number of shares to