Initial Public Offering

A start-up company may have its inception through privately invested funds or through procuring capital through the project capital firm or the composite of both funding sources. Venture capital is defined as "money invested to finance the new firm" (Brealey, 362). Venture capitalists often contain chairs on company's board of controllers and supply input in composition of senior administration group that leads company. In chronological development of the thriving company, likely there will arrive the time when development possibilities and expansion plans call for more capital than can sensibly be got through proceeded buying into by project capitalists. How does the business lift capital it desires to extend its development? One option is to sell shares in company to public, which is an "initial public offering (IPO)" (Brealey, 365).

Google's conclusion to elaborate and acquire the bigger customer base commanded to their IPO on August 19, 2004. The difficulties faced by Google are no exclusion, numerous companies' labor with decision of going public and timing. The loss of some control and obligations can deter some companies from taking that leap, as is showed each step in setting up an IPO below. In this paper we will succinctly talk about financing issues that arrive about when the company precedes public. There are many pieces to be cognizant of when the business makes this conclusion to go public. A company desires to realize process of issuing securities, ways to advocate supply before it is traded, getting titles straight on freshly handed out supplies, basics of underwriting and distinct kinds of underwriting agreements. These are staples that an association desires to be informed on in order to start successfully. We will furthermore address registration, disclosure and compliance matters, cost of issuance, influence on ownership and command, and source and submission funds.

Registration, revelation, and Compliance Issues

An Initial Public Offering (IPO) is first sale of the corporation's common shares to public investors. The main reason of an IPO is to lift capital for corporation. While IPO's are productive at raising capital, they furthermore impose hefty lawful compliance and describing requirements. The term only refers to first public issuance of the company's shares; any later public issuance of shares is referred to as the Secondary Market Offering (Wikipedia, online).

Google filed for their primary public proposing on April 30, 2004. The business said in filing with Securities and Exchange charge that company expects to lift as much as $2.7 billion from offering, which will be undertook in common format of an online auction. This was an attempt to make shares more broadly available. Morgan Stanley and borrowing Suisse First Boston (CSFB) were named as lead underwriters for deal. In filing, Google said that it generated revenues of $961.9 million in 2003 and reported total earnings of $106.5 million. Sales increased 177 percent from the year before whereas earnings increased by just 6 percent. Google also revealed that company has been profitable since 2001 (La Monica, 64).

Cost of Issuance

As mentioned earlier, an IPO's purpose is to raise capital ...