What are the steps in preparing an initial public offering?

What will be an ideal response?

Answer: Preparing an offering involves assembling a team of advisors that includes legal experts, a public accounting firm to serve as auditor, and an underwriter, a specialized type of bank known as an investment bank that buys the shares from the company and sells them to investors. This team prepares required financial statements, organizes a board of directors, hires a public relations firm to begin promoting the upcoming offering, and engages in due diligence to make sure the company's financial policies and systems meet the expectations and legal requirements of public ownership. A prospectus has to disclose information about the company and its finances when registering the IPO. Before the stock is officially offered for sale, the company and its team promote the offering privately to institutional investors through a series of meetings called the road show. Although the IPO is the first "public" offering, shares are usually offered only to institutional investors or selected individual investors before the IPO date. Based on the demand they perceive during the road show, the company and the underwriter decide how to price the IPO shares. After the SEC approves the registration, the stock begins trading on a designated stock exchange, and the company is now officially public.