There are advantages and disadvantages to Initial Public Offering (IPO).
Having access to public capital is a main advantage as it does not have to be
paid back, and can help aid in obtaining supplies, and other material needed
to run a company. One main disadvantage is it takes two years, which is quite
a bit of time in business world. For an IPO to be obtained, there has to be
approval from the SEC. This approval requires a lot of different things in
order to make it happen. It is the company's responsibility to employ an
underwriting team to determine and help write up all of the legal agreements,
and advocate for the company to ensure that the company complies with the
rules of the SEC. The last step to get an IPO is for the company to be
monitored financially. Once all of this is done the SEC will provide their
commentary for the initial registration statement. The company then finalizes
and they agree.(
During this process the company will be required to disclose any legal
proceedings. These must be known before the company can go public. The
company is closely monitored financially, as well as management wise. With
Fred's Miracle Cough Syrup having a possible claim of sexual
discrimination, forged checks and online sabotage, that will probably not
look too good to the SEC. The approval for the IPO won't come so easily
with these pending issues. The company will disclose these issues to the SEC
so it can be made public the legal actions of the company. This will be
something that can cause a negative outlook for the potential investors. Fred
will need to take action to show that he was not involved in anything as far as
sexual harassment. It may be to his advantage to hire someone to prove this
on his behalf.(
The other thing that will show up financially is the forged checks. It looks
good that Jane is in recovery for rehab, but having that on record is a red flag
for the SEC. The online sabotage by Bob will have an impact on the IPO as
that patent infringement has to be reported, and does not look good on the
company as well.(
Some work will need to be done on the company's part to make sure they
comply with the SEC regulations to be able to go public.(
