Raising Capital and Corporate Ethics

Raising Capital and Corporate Ethics Name: Affiliation: Course: Instructor: Date: Raising Capital and Corporate Ethics IPO and How Management Think about their pre-IPO Communications The Initial Public Offering (IPO) refers to the process through which a private organization changes to a public company by providing shares for sale in exchange for money. The event indicates that the organization has shifted to public ownership, allowing it to raise substantial capital to fund new growth and development. The IPO process demands authorization from the Securities and Exchange Commission (SEC) or other security regulatory bodies (Biz Talk, 2017, 3:40-4:05). This translation enables the organization to introduce greater public scrutiny and accountability while raising capital from several investors. Management should strategically approach the pre-IPO process. Notably, the management must comply with regulatory requirements, evading statements that could be perceived as progressive, which enables investors to build confidence and alleviate lawful risks. Steps in an IPO Process The IPO process consists of five main steps: selecting an investment bank, due diligence and regulatory filings, pricing, stabilization, and transition to market competition. The organization chooses a bank to lead the underwriting process. The company selects the bank depending on diverse criteria, including bank reputation, industry experience, and expertise in that sector (Corporate Finance Institute, 2018, 0:31-0:42). The due diligence and regulatory filings step entails the company and the bank evaluating the form of underwriting agreement like firm commitment. A firm commitment is when the underwriter buys the whole offering and sells it to the public, whereby the bank takes all the risk (Corporate Finance Institute, 2018, 1:15-1:20). Regulatory filings are submitted to reveal information about pricing, risks, company, and valuation. The pricing step involves the IPO price affected by investor interest and market demand. IPO is priced at a sli...