Do I Need a Lawyer for an IPO?
So you're thinking about taking your company public. Initial public offerings (IPO) are on the rise now more than ever. However, seeking an IPO is a complex process that takes hours of research and dedication. You'll want to know the law and seek an attorney before making any major decisions. Below you will find 10 reasons why you should seek out the help of a qualified attorney before, during, and even after the IPO process.
10 Reasons to Speak to a Lawyer
10. GOING IPO: Before you make an IPO stock offering, you will need to ensure that your company is in compliance with all relevant state and federal laws, that the company's contracts will not be negatively affected by the IPO, that existing investor agreements will not discourage new investors, and that no other existing obligations or legal difficulties result in unpleasant surprises.
9. INVESTOR AGREEMENTS: When an accredited investor purchases stock which your company has not registered for general public sale, the investor agreement is a very important safeguard for your company. An attorney should draft these agreements and ensure that the sale is well documented to prevent future challenges and support the registration exemption.
8. ANNUAL REPORT PREPARATION: The annual report contains many financial disclosures and statements about your company's performance and goals. An attorney can review these materials for accuracy and completeness in meeting securities laws requirements.
7. ANNUAL MEETING PREPARATION: Laws regulate many aspects of an annual meeting, including shareholder notification and proxy handling. An attorney can help ensure that the company meets all of these legal requirements.
6. PROMOTING SECURITIES: Promoting your company's securities to analysts and other financially influential individuals requires disseminating a great deal of financial information and effectively communicating your company's prospects. An attorney can help maximize the benefit of your promotional materials without violating disclosure rules by disseminating incomplete or misleading information.
5. STOCK OPTIONS: Key management and employees have come to expect a stock option plan as part of their compensation, since they expect that their work will increase the value of the company's stock. An attorney can help craft stock option plans that are attractive, will benefit the company and the employee, and will not have unexpected consequences.
4. SHAREHOLDER AGREEMENTS: Because it is so easy for a group of shareholders to violate the rights of another when the number of total shareholders is low, a well-written shareholder agreement protects the rights of individual shareholders and can prevent costly conflicts. An attorney can identify areas of risk and tailor an agreement to the needs of your company.
3. CAPITAL AND CORPORATE STRUCTURE CHANGES: As a company evolves, its capital and corporate structure needs will change. Your lawyer can help anticipate needs, plan the necessary structural changes, and accomplish their adoption.
2. ONGOING LEGAL COMPLIANCE: Your company must ensure that its officers and employees follow securities laws, such as the prohibition against insider trading. Your company will need to create and enforce compliance policies. It will also need to consult an attorney when questions which aren't covered by the policies arise. Also, securities laws change as states and the federal government pass new legislation, regulatory agencies make new rules, and the courts interpret existing law. An attorney can help keep your company on track with the changing rules for doing business.
1. DISASTER STRIKES: While an ounce of prevention hopefully avoids a pound of cure, nearly every business eventually faces the consequences of a broken law or regulation. Having an experienced attorney on your company's side can help you weather these problems while minimizing the impact on your company's future success.
Important Next Steps
Now that you've identified that you'll need a lawyer during the IPO process, you'll want someone you can trust. Contact an experienced business and commercial law attorney in your area today to learn more.