The purpose of this paper is to describe the financing issues that an organization faces when that organization goes public. This paper will use CardioNet, an organization which has had an initial public offering within the past three years, as an example. This paper will explain registration, disclosure, and compliance associated with an initial public offering. This paper will address the cost of issuance, the impact on ownership control and return, and source and application of funds.
Registration, Disclosure and ComplianceOnce an organization decides to go public, the next decision to make is where to list. Listing requirements will differ between the New York Stock Exchange (NYSE), National Association of Securities Dealers Automated Quotation System NASDAQ and American Stock Exchange (AMEX). Listing requirements include pretax income, market value and share size of public float, net tangible assets, number of shareholders, and share price. An example of one of these variances is the amount of income before federal income taxes.
The NYSE requires $2.5 million for the most recent year and $2 million for the two years preceding that. The NASDAQ only requires $1 million in income before federal taxes in the last fiscal year or in two of the last three years (Inc.com, Stock Exchanges and Security Laws, 2007).
An IOP Registration Statement includes two parts. The first part is the official offer or selling document, also referred to as the prospectus. Information in this document includes business operations, management and financial health. Part two contains additional information accessible through the Securities and Exchange Commission (SEC). In addition to a business summary, income statements and balance sheets (audited by an independent CPA), and information regarding management, a registration statement will also include risk factors, compensation and benefits plans, distribution plan for the stock offerings, and a statement on how...