Stocks trade better when you combine accountability and human oversight with world-class technology. At the center of this sits the DMM. DMMs are among the most sophisticated trading firms. Every NYSE-listed company has their own DMM that they select at the time of listing. While these market makers also trade on other exchanges, their behavior is different on the NYSE because our unique rule set includes greater obligations for DMMs. They are responsible for maintaining a fair and orderly market designed to enhance investor protections and support issuers, especially during critical times in the market—they are accountable.

In addition to the DMM, the NYSE overlays human oversight and service through our active trading floor. This means the NYSE is better able to manage complex transactions, navigate special situations and help dampen volatility.

Finally, the underpinning of all this is our proprietary technology known as Pillar. This technology has resulted in significant benefits for our issuers and their investors: more efficient processing, industry-leading response times and more precise trading—a better trading experience found only on the NYSE.

Better trading matters to issuers for key liquidity events like lock-up expirations, follow-ons and share repurchases, but it also matters to your investors. The NYSE model is purpose-built to give you peace of mind when it matters most.

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When considering an IPO, a company should evaluate the pros and cons, as well as the motivations for going public. This evaluation process is best conducted in conjunction with an investment bank, which can assist the company in thinking through the key points.

Going public affords a company access to capital, both at the time of IPO and on an ongoing basis. An IPO can consist of primary and/or secondary proceeds. A company can raise primary capital to fund growth, make investments and/or repay debt. An IPO can also provide liquidity to existing investors and give them an opportunity to sell stock.

Advantages of conducting an IPO

Potential issues

Going public without an offering

Companies may take 6, 12, 18 or even 24 or more months to prepare for their initial public offerings (IPOs) before formally engaging underwriters and kicking off the actual transaction.

Every company that pursues an IPO is going to be compared by analysts and investors with other companies that are already public. As a result, it is important to begin to understand how your company appears when looked at in this way and, to the maximum extent possible, use this knowledge to take the steps necessary to ensure that your company is positioned correctly.

Look at your company the way investors will

Prepare to be a public company

Revisit risk with a public company mindset

Consider how you will get to the desired tax and organizational structure

Consider the composition of your board of directors

Review related party ransactions

Shareholder arrangements

Anti-takeover protections

Incentive compensation arrangements

Managing third-party risk

Going public involves assembling a large and experienced team of professionals, including lawyers for the company and the underwriters, independent auditors and the underwriters, as well as other service providers. The company should carefully consider the skills and qualifications of all parties it hires, given the importance of the advice and services provided throughout the process.

Choosing advisors

Financial information

Planning and executing an IPO is time intensive and typically takes 16–20 weeks or more from organizational meeting to closing. The exact time taken can vary depending on the company’s readiness prior to embarking on the IPO process, the complexity of the transaction, market conditions and numerous other factors. Achieving this timeline requires significant preparation, including the completion of required financial disclosure, which is critical for the drafting of the registration statement. A large team of professionals is involved in the IPO process, overseeing the key workstreams: drafting of the registration statement, due diligence, preparation of transaction documentation and other marketing materials (e.g., analyst presentation, roadshow presentation).

Process timeline

SEC registration and prospectus

Underwriting, marketing, and sale

A direct listing is a relatively novel alternative method of becoming a public company in the United States. In a traditional selling shareholder direct floor listing, existing shareholders can list and sell shares on a national stock exchange without an underwritten offering, enabling them to freely sell their shares on such exchange. Additionally, subsequent NYSE rule changes approved by the SEC permit a company to offer its own shares in a primary direct floor listing.

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There is a strong temptation to approach initial public offering (IPO) communications solely as a listing-day event, planning meticulously for the inevitable publicity surrounding the first day of trading. In reality, day one is not the finish line but the start of a company’s new life in the public markets. Preparation should begin early, potentially even before the registration statement is filed. This will ensure the narrative being shared with the investment community is one that highlights the company’s unique position within the market, is sustainable and is delivered consistently across all communication channels. It is also critical to establish the communications infrastructure needed to operate successfully as a public company and to recognize the paradigm shift in communications and the increased scrutiny that newly public companies face. Anticipating risks as well as addressing the needs of a variety of stakeholders before and after the listing are of paramount importance to ensure sustained momentum and success in the aftermarkets.

Preparing an IPO communications strategy

Communicating with the market post-IPO

Legal framework for communications

Market intelligence and surveillance

Investor targeting and outreach

Market perception feedback

Investment community database and CRM

ESG and the newly public company

The preparation for being public should happen in parallel with the IPO. Take stock of your processes and infrastructure so that you can address any gaps well in advance of the IPO date. This preparation process can often be lengthy, depending on the maturity of existing processes. How significant the required improvements are will determine the number of resources required. Many companies have resource constraints during the going public process, where there is so much attention being paid to the IPO filings and marketing efforts that other efforts may find themselves deprioritized. It is worthwhile to find a way to keep these efforts at the forefront.

An understanding of the basics of the ongoing public reporting obligations can inform the work that is needed to prepare your company’s finance organization and other functions for the rigors of being public.

Ongoing reporting

Listing standards

United States federal regulations require all public companies to hold an annual meeting where shareholders can cast votes in one of two ways: either in advance of the meeting by proxy or at the meeting in person. Shareholders are given the opportunity at each year’s annual meeting to cast their vote on the election of directors of the corporation and the ratification of the company’s auditors; in many cases, shareholders may provide their advisory vote on the past year’s executive compensation (known as Say on Pay).

The annual meeting provides an opportunity for management to build and strengthen shareholder relationships and engagement. Annual meetings are, generally, formally scripted and planned. The company usually selects the meeting place, which must accommodate the anticipated number of attending shareholders and others. Management and the board of directors decide whether to hold the annual meeting at the same location or at alternative sites.

Proxy statement and annual meeting

Providing shareholders with proxy material

Ownership reporting by shareholders

Share ownership mechanics

Given the legal regime in the United States, inherent in conducting an IPO and life as a public company thereafter is the reality that you can be exposed to vexatious lawsuits.

Liability under the US securities laws in connection with an IPO primarily arises under the Securities Act. Exchange Act claims are also possible. The Securities and Exchange Commission (SEC) has broad powers to investigate public companies and their directors and officers. It can bring civil enforcement proceedings that could result in fines and monetary penalties or other sanctions (such as a bar from serving as a director or officer of a public company). In addition, a public company and its directors and officers could also become subject to criminal liability for, among other things, willful violations of securities laws or interference with a government investigation. Finally, many of the provisions of the securities laws also provide for private rights of action in which investors individually, or as representatives of a class, can bring a lawsuit against the company and its directors and officers. These private class action lawsuits are the most common proceedings to which companies and their directors and officers are subject for alleged misstatements or omissions in connection with registered securities offerings.

Liability under the federal securities laws

Class action and derivative lawsuits

Indemnification

D&O liability insurance

Personal risk management

The tranche of shares that foreign issuers sell to US investors when going public often takes the form of American depositary shares, commonly known as ADRs. These instruments subsequently trade just like ordinary shares on the NYSE, another US stock exchange or in the over-the-counter market.

American depositary receipts

The IPO process for foreign private issuers

Financial information

IR and communications