Going Public

Any company can go public. A history of good earnings, promising prospects or products, competitiveness and a sound management team are integral to the success of a public issue of shares.

Readiness to go public depends on:

• Strong future growth and revenue earning potential
• A competent management team
• A need to raise capital

Additionally, if the company is at the developmental stage where manufacturing, marketing and technological viability has been achieved but it has not yet shown a profit, this may be the right time to make a public offering.

This is dependent on the capital needs of the company and the percentage of ownership that the owner(s) is (are) willing to offer to the public.

The issue price of the shares is decided based on discussions between the company and the broker/investment banker who is managing the issue. The major factors to be considered are the marketplace and the price that the market will pay for the shares of the company. Other factors to be considered are:

• Economic climate
• Past earnings
• Projected growth
• Type of securities to be issued (i.e. common or preference)

Deciding when to go public is crucial. In order to get the desired price, there must be investor interest and suitable industry and economic conditions. Working together with advisors, the company can determine when the conditions are right to make a public offer.

The precise cost is hard to estimate because each issue is unique. The most significant costs are those for legal, accounting, broker and printing services. There are also TTSEC fees and TTSE listing fees which will depend on the value of the securities being listed and TTCD fees. Most of these costs are upfront and may not be covered by an unsuccessful issue.