| · | Step 1: Decide to go public. |
| · | Step 2: Audit the last three years of the firm's financial statements. |
| · | Step 3: Select an investment banker to guide the IPO process. |
| · | Step 4: Draft a registration statement and submit it for review by the SEC. |
| · | Step 5: Respond to the SEC's comments and issues a prospectus. |
| · | Step 6: Spend 10-15 days "on the road," explaining the firm's attributes to investors. |
| · | Step 7: On the day before the offering is released, decide upon a final price. |
| · | Step 8: Offer the stock to the public and see how it is received. |
| 1. | Bust-up LBO - A leveraged buyout involving the purchase of a company with the intent of selling off its assets |
| 2. | Build-up LBO - A leveraged buyout involving the purchase of a group of similar companies with the intent of making the firms into one larger company |
| 3. | Management buyout (MBO) - A leveraged buyout in which the firm’s top managers become significant shareholders in the acquired firm |
| 1. | An IPO is one way to signal to investors that a firm is a quality business and will likely perform well in the future. |
| 2. | A firm whose stock is traded publicly has access to more investors when it needs to raise capital to grow the business. |
| 3. | Being publicly traded helps create ongoing interest in the company and its continued development. |
| 4. | Publicly traded stock is more attractive to key personnel whose incentive pay includes the firm’s stock. |