Get Your Business Funded: Creative Methods for Getting the Money You Need

2. Create and Submit the Registration Documents

Initial public offerings are regulated by the federal government. Thus, to proceed with an IPO, a company must submit a registration statement to the SEC. This is no pro forma document; it must fully, accurately, and carefully disclose the following:

• The history of the business's formation, management, prospects, and strengths.
• An explanation of how the company plans on using the proceeds of the IPO.
• Risk factors associated with the business.
• A history of all directors, officers, and principal shareholders.
• Legal proceedings the company is involved in.
• Audited books.
• Copies of relevant corporate documents.

The SEC disclosure document is also at various times called the prospectus, the red herring prospectus, and the S-1 filing.

Once all of these documents have been submitted to the SEC, a several-month review process is undertaken. During this time the company and its investment bankers can discuss the IPO with potential buyers.