Equity Offerings — IPOs and Follow-ons

Initial Public Offerings

• In an IPO, a private company sells shares to the public for the first time, usually through an underwriting syndicate led by one or more book-running managers. The process includes due diligence, drafting the registration statement, roadshow marketing, investor education, bookbuilding, pricing, and allocation.
• The prospectus is part of the registration statement filed with the SEC, often on Form S-1 for domestic issuers. During the waiting period, offers may be made through a preliminary prospectus, but sales cannot be completed until effectiveness.
• Pricing balances issuer proceeds against aftermarket performance and investor demand. Overallotment options, often called greenshoes, give underwriters flexibility to stabilize distributions and cover short positions.

Follow-On Offerings

• Follow-ons occur after a company is already public. They may be primary offerings, which raise new capital for the issuer, or secondary offerings, where existing shareholders sell stock and receive the proceeds.
• Deals can be fully marketed, accelerated, block trades, bought deals, or at-the-market programs depending on issuer needs and market conditions.

Execution Issues

• Underwriters analyze valuation, dilution, float, lockups, research restrictions, stabilization, and exchange listing requirements. Market windows matter because volatility can widen discounts and impair execution.

Series 79 focus

• Know the distinction between IPO and follow-on mechanics, primary versus secondary shares, and underwriter responsibilities in registration, pricing, stabilization, and syndicate management. Exam questions often test filing stages, offering proceeds, and overallotment function.