From filing to first trade
The process typically begins with drafting a registration statement, which SEC staff reviews and comments on, sometimes through several rounds. Many companies submit early drafts confidentially before the filing becomes public. While the offering is in registration, communications are restricted, and statements that look like ordinary marketing can raise gun-jumping concerns. Once the staff's comments are largely resolved, the company and its underwriters conduct a roadshow and build an order book. The SEC then declares the registration statement effective, the offering is priced, and trading begins on the chosen exchange, usually in quick succession. Closing and delivery of shares follow a short time later.
The underwriting agreement
Most traditional IPOs are firm-commitment offerings, meaning the underwriters agree to buy the shares and resell them to investors. The underwriting agreement is signed at pricing and contains the company's representations, the underwriters' conditions to closing, and indemnification running in both directions. Conditions usually include legal opinions and negative assurance letters from counsel and comfort letters from the auditors. Underwriters often receive an option to buy additional shares to cover over-allotments. Insiders and existing holders are typically asked to sign lock-up agreements restricting sales for a period after the offering, and the terms of those lock-ups are often negotiated.
Decisions on the front end
In early planning we discuss whether a traditional underwritten IPO fits the company, or whether a direct listing or a combination with a SPAC deserves a look, since each route carries different disclosure and liability profiles. We review the capitalization table and charter documents to see what must change before or at the offering, including any dual-class structure or forum selection provision. We also set communication guidelines for management and employees while the deal is in registration. The goal is to surface issues that tend to delay an IPO transaction while there is still time to address them quietly.
