Initial Public Offering (IPOs) Lawyer
The capacity to create capital as a public company is often the payoff of years of painstaking work. It can create a substantial opportunity for an organization to scale, pay debts, and stay solvent for the foreseeable future.
Like any significant and transformative event, the process of initial public offerings (IPOs) can be taxing and involves a multitude of considerations and obligations that a qualified business lawyer can assist with.
Several requirements and new obligations must be thoroughly understood by a company before making any decision.
What is an Initial Public Offering (IPO)?
Under U.S. federal securities law, a company cannot raise capital or offer shares of its stock to the public unless the offering has been registered with the Securities and Exchange Commission (SEC) or it qualifies for an exemption from registration.
An IPO marks the first time a company offers its securities to the public. Before its initial public offering (IPO), a company is typically in the private or closely held company phase, characterized by a small number of early investors, including family and friends, angel investors, and/or venture capitalists.
By converting it into a public company, a portion of its securities will be owned by public investors, and the stock will trade on a national securities exchange, such as NASDAQ or NYSE, or be quoted in the over-the-counter markets, including OTC Pink, OTCQB, or OTCQX.
Advantages and Disadvantages
Going public through an Initial Public Offering (IPO) can have substantial strategic and financial advantages, but it also brings new challenges and risks. Companies typically pursue an IPO with the intention of broadening their financing options, raising capital for growth or change, reducing existing debt, or creating liquidity for earlier investors.
Advantages:
- A broader and diverse investor base
- Increased liquidity and long-term financial viability
- Improved visibility, credibility, and public perception
- Ability to recruit and retain top talent through stock options
- Increased flexibility to grow, including using stock as currency for acquisitions.
Disadvantages:
- Increased regulatory scrutiny, obligations to disclose
- Loss of control and influence
- Increase in administrative costs and ongoing compliance expenses.
- Increased pressure to satisfy shareholder requirements and expectations
- Public disclosures allow competitive insights.
Filing and Reviewing in the IPO Process
During the IPO process, you must file the Registration Statement to fulfill your obligations under the Securities Act of 1933. For a domestic issuer, this filing must be done on Form S-1, and for a foreign private issuer, on Form F-1.
The registration statement will contain all information that an investor would consider reasonable to have available when making an investment decision. The information that must be disclosed in a registration statement includes financial information, details regarding the offering, risk factors, disclosures regarding beneficial ownership and executive compensation, as well as other disclaimers.
The registration statement will outline how the company intends to utilize the capital raised and offer the first substantial insight into the company’s business model, operations, and past performance.
Once the main offering documents are drafted and ready, they are filed with the SEC for review and approval. At this point, the company must also submit an initial listing application to the stock exchange, where it will ultimately list its shares.
At this stage, the company will finalize critical components, including the offering size, share price, and gauge investor appetite for the offering. During this diligence checkpoint, the company must ensure all material information about the offering is accurate and fully disclosed.
Once the company addresses all of the SEC staff comments on the registration statement, an effective date will be established, and the company will be cleared to proceed with a public offering. At this point, the company officially starts to act as a public reporting company.
Alternatively, a company could go public via equity crowdfunding and conduct a Regulation A offering, which allows for a more flexible structure to raise capital from the public.
While business leaders consider themselves best qualified to address the intricacies of their industries, IPO filings are complex legal documents. Errors, omissions, or misstated financial disclosures can impact the effectiveness of an IPO and the company’s reputation, as well as subject it to regulatory scrutiny. IPO requirements are intended to protect both investors and the issuing company or seller.
To achieve these IPO objectives, filings should always be undertaken by a legal expert with significant experience in guiding companies through the public offering process.
Why should you get our IPO Attorney?
Before undertaking the entire IPO process, a company should engage an experienced IPO attorney to ensure compliance with all applicable state and federal legal regulations and to verify that no obligations or legal obstacles exist that could prevent a successful IPO filing.
By hiring Drishti Law for your IPO attorney needs, you can prevent any negative impact of the IPO process on the company’s current operations or existing contracts. Our IPO attorney takes a strategic approach that enables them to understand the entire process of going public and serve as a valuable resource, allowing the company to make well-considered decisions without encountering unanticipated complications.
We can help you Go Public
Our securities and IPO attorneys frequently assist clients with traditional IPO transactions, and they frequently handle all the legal work required for going public for many clients, including the following:
IPO & Equity Capital Markets
Initial Public Offerings (IPOs) are a significant milestone for any organization that is ready to transition from private ownership to public ownership among shareholders. The IPO and Equity Capital Markets practice consists of advising both emerging and established companies on navigating the regulatory complexities surrounding U.S. securities law to structure and execute public offerings.
As legal counsel in this space, we collaborate with underwriters, auditors, and management to develop IPO transactions that comply with SEC regulations and attract investors for your company.
The firm also reviews and assists in preparing registration statements, manages investor disclosures, and liaises with regulatory bodies such as the SEC and FINRA. They ensure that the offering documents accurately and fairly portray the issuer’s financial condition, business model, and risk factors.
Corporate Restructuring for Public Offering (Change in Capitalization, Stock Configurations)
As part of the IPO process, companies typically undergo corporate restructuring to meet public market standards, which may involve changes to the capitalization table, including preferred-to-common stock conversions, reverse stock splits, or consolidating classes of ownership.
Our attorneys can draft and execute these changes, including amendments to the company’s certificate of incorporation and changing shareholder agreements. Ultimately, our goal is to simplify the equity structure, ensure that stock grants align with investor and SEC expectations, and lay the groundwork for a more streamlined public offering process.
Preparing Board Resolutions and Governance Documents for an IPO
Board governance is fundamental to obtaining regulatory approval for an IPO and the confidence of investors.
Preparing for an IPO requires creating board resolutions that would give the company the authority to go public, approve any changes to the company’s organizational documents, adopt stock plans, and establish committees for public disclosure, compliance, or audit matters.
You may also need to revise your governance documentation to reflect the increased levels of accountability, disclosure controls, and internal oversight functions that accompany being a public company.
Drishti Law will work closely with corporate secretaries and company executives to ensure company compliance with fiduciary duties through the provision of comprehensive and compliant board materials.
Supporting Drafting and Disclosure Review of an SEC Form S-1
The Form S-1 is the primary filing for any IPO under the Securities Act of 1933. Our lawyers play a crucial role in drafting and reviewing this registration statement, which includes the financial statements, risk factors, use of proceeds, executive compensation, business description, and other relevant information.
Our team will coordinate with financial advisors and auditors to ensure that all necessary and complete disclosures are accurate. They assist in responding to SEC comment letters and sometimes will coordinate the legal and compliance elements of the roadshow and investor communications.
The Form S-1 process involves a detail-oriented and strategic approach to ensure that there is no unnecessary delay or a lack of disclosure in the offering.
Equity Financing & Private Placements
Apart from IPOs, equity financing through private placements is a method for companies to raise capital without undergoing public registration. This is where our team of attorneys comes in to structure and negotiate the terms of the investment, prepare disclosures, and ensure compliance with applicable securities exemptions.
Private placements may use convertible notes, SAFEs (Simple Agreements for Future Equity), or preferred equity offerings.
Our team ensures that investors are provided with accurate, risk-understandable information and that the offer is structured within an appropriate regulatory framework to limit liability and streamline the fundraising process.
Documentation for Series A, B, C Venture Capital Funding Rounds (Subscription Agreements and Investor Rights Agreements)
Every round of initial capital funding—Series A, B, C—requires unique legal documentation tailored for investor rights, preferences, and obligations.
For Series A, B, and C rounds, our lawyers generally prepare and negotiate subscription agreements, investor rights agreements, right of first refusal agreements, voting agreements, and amended corporate charters, among other documents.
The legal documentation establishes liquidation preferences, anti-dilution rights, rights to have board representation, and other protective rights. Working with our lawyers will help ensure that founders maintain sufficient control over their company and that investors are protected, allowing each party to balance the company’s strategic growth while ensuring proper governance.
Drafting Stock Option and Equity Incentive Plans
For the growth of companies, attracting and retaining talent is important, and equity incentive plans are a popular method of doing so.
Our legal advisors draft and implement stock option plans, restricted stock awards, and other types of equity compensation. These plans comply with IRS rules (e.g., 409A and ISO/NSO rules), securities laws, and, in many cases, stock exchange listing requirements.
A properly drafted plan will provide flexibility for the company while maintaining clarity and fairness for the recipients, and will properly incorporate vesting deadlines, restrictions on transfers, and tax issues.
Post-IPO & Ongoing Securities Obligations
After a company goes public, it is subject to continuing obligations of compliance. Our attorneys at Drishti Law provide support and guidance to the company in understanding and fulfilling its ongoing compliance obligations.
Compliance responsibilities include, but are not limited to, public company filings with the SEC (Forms 10-K, 10-Q, and 8-K), proxy disclosures, and compliance with the Sarbanes-Oxley Act (SOX).
We advise the board of directors and management on internal reporting, appropriate engagement with the audit committee, and investor communications, ensuring that disclosure obligations are met and the risk of enforcement action or litigation is minimized.
Quarterly/Annual Reporting Obligations (Forms 10-K, 10-Q and 8-K)
When a company is publicly traded, the company must file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K if a material event occurs.
Our team of IPO attorneys assists the company in drafting filings and collaborating with both the finance and compliance teams to prepare and review filings for completeness and accuracy.
Each filing must meet the SEC’s requirements and accurately reflect the company’s financial health and risk exposure. We not only vet the disclosures, but are also responsible for ensuring that they are filed on a timely basis to avoid penalties and to maintain investor (and public) confidence.
Rule 144 Resale Compliance, Insider Trading Policies
After an IPO, company insiders face restrictions on reselling their securities and are required to comply with Rule 144 to sell their securities without registration. Our team of experienced IPO lawyers assists with establishing procedures for trading windows, drafting insider trading policies, and training executives on their responsibilities under federal securities laws.
Insider trading policies are a means to help prevent violations and foster a culture of compliance within the company. We also review stock transactions to confirm compliance with the holding period, volume limits, and public information around the issuer.
Securities Counsel for Publicly Traded Small-Cap Companies
Publicly traded small-cap companies operate with many of the same regulatory obligations as larger-cap companies, but those small-cap companies often don’t maintain the same depth of legal and compliance capacity.
Our securities team specializes in providing flexible, scalable legal solutions for small-cap public companies. From SEC and state compliance reporting to proxy preparation, capital raise support, investor relations, and board governance, we offer practical, hands-on guidance tailored to the demands of public markets.
What sets us apart is our ability to leverage deep internal expertise and trusted counsel relationships. This allows us to assemble the right team for each client, adapting to unique regulatory and business needs while maintaining efficiency and cost-effectiveness. Whether your matter calls for targeted advice or full-service support, we tailor our securities counsel approach to fit your goals.
Contact Us to Avail of These Services
If you have questions about this topic, please reach out to Drishti Law at 773-234-1139 for a complimentary consultation. Our experienced intellectual property and IPO lawyers are here to guide you through the registration process, helping you secure a lucrative deal while ensuring compliance with all legal requirements.