IPO listings: disclosure-based versus paternal choices

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Katherine Wu - October 25, 2018

In my previous Messari feature, I wrote about U.S. securities laws and the ways a company can raise capital in public and private markets under current U.S. regulation.

The TLDR of the previous post: Since the financial crisis, IPO activity is flat, while private offerings have doubled. This is largely due to the immense paperwork / compliance burden and cost to IPO. So more companies are delaying or entirely circumventing an IPO as a fundraising mechanism. Instead, more money is being funneled into projects via private offerings.

But what is an IPO?

The IPO process in the U.S.

In the U.S. public markets, a company can apply for listing on an exchange, like the NYSE or Nasdaq, so long as they meet certain minimum requirements and provide accurate, relevant information about their companies for shareholders. Generally (and I’m massively over-simplifying this), the first step in an IPO is to elect an investment bank and legal team to work with. After that, the nightmarish process of “filing”, aka “get all of your shit together” begins.