IPO COST (2024)

Taking a company public through an initial public offering (IPO) is a complex and expensive process that requires careful planning and execution. Here's a step-by-step guide to the IPO process, along with an estimated cost.

1. Hire an investment bank: The first step in the IPO process is to hire an investment bank to help with the underwriting process. The bank will work with the company to determine the offering price and number of shares to be sold.

Cost: The cost of hiring an investment bank can range from $1 million to $5 million, depending on the size and complexity of the offering.

1. File registration statement with the SEC: The company must file a registration statement with the Securities and Exchange Commission (SEC), which includes financial statements, a description of the business, and other relevant information.

Cost: The cost of preparing the registration statement can range from $500,000 to $1 million, depending on the complexity of the company's financials and operations.

1. SEC review: The SEC will review the registration statement and provide comments, which must be addressed by the company and its advisors.

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Cost: The cost of addressing SEC comments can range from $100,000 to $500,000, depending on the number and complexity of the comments.

1. Roadshow: The company will go on a roadshow to meet with potential investors and promote the IPO.

Cost: The cost of the roadshow can range from $500,000 to $1 million, depending on the number of cities visited and the size of the investor audience.

1. Pricing: The underwriter will determine the final offering price based on demand from investors.

Cost: There is no direct cost for pricing, but the offering price will determine the amount of proceeds the company receives from the IPO.

1. Closing: The underwriter will purchase the shares from the company and sell them to investors.

Cost: The underwriter will receive a fee, typically 5% to 7% of the offering proceeds.

Overall Cost: The overall cost of an IPO can range from $2.5 million to $10 million, depending on the size and complexity of the offering. This does not include ongoing costs of being a public company, such as legal and accounting fees, investor relations, and compliance costs. Companies should carefully consider the costs and benefits of going public before embarking on an IPO.