Initial Public Offering for Google Inc.
A start-up corporation may have its inception through privately invested funds or through procuring funds through a venture capital firm or a composite of both funding sources. Venture capital is defined as "money invested to finance a new firm" (Brealey, Myers, and Marcus, 2004, p. 368). Venture capitalists often hold seats on the company's board of directors and provide input in the composition of the senior management team that leads the company (Brealey et al., 2004, p. 369). In the chronological development of a successful company, likely there will come a time when growth opportunities and expansion plans call for more capital than can reasonably be obtained through continued investment by venture capitalists. How does a company raise the capital it needs to continue its development? One option is to sell shares in the company to the public, which is an "initial public offering (IPO)" (Brealey et al., 2004, p. 370).
On April 29, 2004, the internet search engine company Google filed a Form S-1 or registration statement with the Securities and Exchange Commission (SEC) under its chartered name of Google Inc. As news of the pending IPO spread, speculation ran rampant about the potential earnings that Google might anticipate. CNN Money reported that, "Wall Street has been eagerly anticipating a filing from Google so investors could finally get a glimpse into the company's finances (LaMonica, 2004, p. 1). In addition, the already intense competition between Google, Yahoo, and Microsoft's MSN was projected to escalate substantially as a result of Google's intent to move into the public domain.
Registration, Disclosure, and Compliance Issues
A business moving toward an IPO has a number of requirements that it must meet in order to satisfy the SEC standards for issuing common stock. In order to achieve its...