A company has four options to be listed on Nasdaq, depending on the company`s underlying fundamentals. If a company does not meet certain criteria, such as minimum operating profit, it must compensate for this with higher minimum amounts in another area, such as turnover. This helps to improve the quality of listed companies. If your company meets these financial requirements, you find that an IPO will help you achieve your business goals and market conditions look good, it`s time to start the IPO process. Typically, it takes four to eight months to complete this process, from the time you actively engage underwriters to the time you complete the offering. Here are the key steps in the IPO process: Building the right management team. Fast-growing companies usually already have strong management teams, but the requirements to become a public company often require additional strengths and skills. The senior management team must have extensive financial and accounting experience to meet increasingly complex financial and accounting requirements. With this in mind, many pre-IPO companies are looking to recruit CFOs or other outside executives who have experience with other companies in the stock market. “I don`t agree with that at all,” Evans says. “An experienced CFO who knows his business well and has been successful in this role never needs to have been publicly issued. However, it is important that key managers have strong communication skills to present the company`s vision and performance to the market and meet the often intense information needs of research analysts and investors.

The composition of your board of directors may also need to be adjusted. The exchange requires that a majority of the Company`s board of directors be “independent” and that the audit, compensation and corporate governance nomination committees, if any, be composed of independent directors. In addition to even stricter requirements for audit committee member independence, Sarbanes-Oxley requires an issuer to disclose whether it has an “audit committee financial expert.” To meet these requirements, independent board members (who are not insiders or affiliates) may need to be recruited, particularly for the audit committee, Evans says. An IPO is essentially a fundraising method used by large companies where the company sells its shares to the public for the first time. After an IPO, the company`s shares are traded on the stock exchange. Some of the main motivations for an IPO are: raising capital through the sale of shares, providing liquidity to the company`s founders and early investors, and obtaining a higher valuation. The regular offering price of the Company`s shares at the time of registration must be at least $4.00. However, a company may be eligible for a closing price alternative of $3.00 or $2.00 if the company meets different requirements. As a general rule, there must be at least three (or four, depending on the criteria) market makers for the security. In addition to the above requirements, financial standards must be met based on the type of security listed as described below. Once a company is listed on the market, it must meet certain standards in order to continue to operate.

Failure to comply with the specifications set by the exchange results in the dekot of the exchange. Falling below the required minimum share price or market capitalization is one of the main factors triggering a delisting. The exact details of a delisting depend on the exchange. Companies can eliminate cash flow and income requirements and reduce their market capitalization requirements to $160 million if they have total assets of at least $80 million and equity of at least $55 million. Going public: which companies should consider going public? Any company can – or should – go public. There are a number of factors to consider before bankers are subpoenaed. These factors include meeting certain financial qualifications determined by the various exchanges, the appropriateness of an IPO strategy for your business and business objectives, and market receptivity to IPOs in general and in your particular industry. Stock Qualifications Before you can even consider going public, you must meet certain basic financial requirements set by the exchange you want to participate in.

For example, if you want to list your company`s stock on the New York Stock Exchange (NYSE), you`ll typically need a total pre-tax profit of $10 million in the last three years and at least $2 million in each of the last two years. The NASDAQ Global Select Market requires total pre-tax income of more than $11 million in the last three fiscal years and more than $2.2 million in each of the last two fiscal years. Fortunately, both exchanges have alternative markets that have less stringent financial requirements for publicly traded companies. The NASDAQ Global Market requires companies to generate pre-tax revenue from continuing operations of $1 million or more in the last fiscal year or two of the last three fiscal years. The NASDAQ Capital Market has a lower barrier to entry and requires net income from continuing operations in the last fiscal year or two of the last three fiscal years of at least $750,000. Meanwhile, the NYSE`s American Stock Exchange (AMEX) requires a pre-tax profit of $750,000 in the last fiscal year or two of the last three fiscal years. Exchanges also offer alternative listing standards based on cash flow, market capitalization, and revenue for large companies that fail pre-tax profit tests. Under SEC rules, a company must also have three years of audited financial statements before it can go public. If a company misses three years of audits, it can often create them “after the fact,” Rowe says, assuming it has the records and systems in place to give an auditor a “look back.” Since this can be an expensive and time-consuming undertaking, advance planning is essential.