In order to go public, a company must register with the Securities
and Exchange Commission (SEC) and prospectus. My first concern is
the fraud case with Jane which could eventually deter potential
investors. Fred and Sally will need to show what internal controls
have been put in place to avoid fraud in the future. Also, there is no
mention of whether Jane is still working for the company. Second is
the pending lawsuit with Tammy for sex discrimination that must be
disclosed. This claim falls into Title VII of the Civil Rights Act of 1964,
which is a federal law that excludes employers from discrimination
based on sex, race, color, national origin, and religion (EEOC, n.d.).
Once they can provide the reason for not offering Tammy the
position, Tammy must show cause for discrimination. Though it
might be simple for Fred and Sally to prove their case since Tammy
doesn’t have any prior experience in the accounting field because she
has been a delivery driver with the company. Ted on the other hand
is a recognized accountant with a background that makes him a more
suitable candidate for the bookkeeper position. Lastly, Fred’s
appearance on a popular talk show starring doctors could create
issues regarding intellectual property rights if the public views the
doctor as the idea owner.
In order to be in compliance with the government regulations, Fred
and Sally must first file the registration statement along with an S-1
with the SEC. This will require a detailed description of company-
owned properties, disclosing all financial information, and any prior
and ongoing legal matters. Ted being hired as their accountant will
show investors how the company is resolving its previous financial
problems.
My recommendation is that the company start preparing to go public
now with the plan to go IPO within 3 years. Usually going public
takes between 18 and 36 months so that time can be used to
hopefully close out any lawsuits and plan for the next steps in the
process. Also, they will need to convert to a corporation over this
time. Taking the extra time could provide additional resources to
grow the company's financials and knowledge before going public
while still using the current stamina the company has from being in
the public eye.
References:
EEOC. (n.d.). Title VII of the Civil Rights Act of 1964. U.S. Equal
Employment Opportunity Commission. Retrieved
from https://www.eeoc.gov/laws/statutes/titlevii.cfm
Kubasek, N. et.al., (2020). Dynamic Business Law, Fifth Edition. New
York, NY: McGraw-Hill Education
Shooting for an IPO? take these steps now before it's too late. First
Round Review. (n.d.). Retrieved April 6, 2022,
from https://review.firstround.com/Shooting-for-an-IPO-Take-
These-Steps-Now-Before-Its-Too-Late
