How to Create a Prospectus for an IPO

by Victoria Duff

One way for an entrepreneur to obtain funding to grow her company is to do an initial public offering (IPO). Generally, these are done after the company has gone through at least one round of private funding through a Reg. D offering. Companies often undertake an IPO, or S-1 offering, because of pressure from the private shareholders who want liquidity for their shares and a chance to make a profit. If you are considering an IPO, the best advice on how to create a prospectus for your IPO is to hire an attorney and an investment bank. If you do it yourself, you may save money -- but have an experienced Securities and Exchange Commission (SEC) attorney review it.

1. Seek advice from the regulators. Contact the SEC's Office of Small Business at 202-551-3460, and tell them you are considering an IPO and want to ask questions about Form S-1.

2. Study other offering documents, which can be found in the SEC's EDGAR database. Your Form S-1 is the format required for a prospectus. A good example of a prospectus is Google's offering document.

3. Use the Form S-1 available on the SEC website as your template. Provide the information in each section in a concise, truthful and business-like manner. Avoid projections of success and hyperbole.

4. Include financial statements prepared by an accountant familiar with public company reporting practices. The most important part of the financial statements is the notes, which will be scrutinized by SEC analysts, so you don't want an amateur preparing them for you.

5. Present your finished prospectus to an SEC attorney for review. It is vital that this document be complete, the disclosures comprehensive and the information presented accurate and free of wishful thinking. Projections made in your prospectus can result in significant lawsuits if they don't materialize.


  • If you haven't written a prospectus before, talk to as many advisers as possible before undertaking the task. Good sources of information are the North American Securities Administrators Association (NASAA) for information on any state requirements you will have to meet in your filing process, the Service Corps of Retired Executives (SCORE) and the Small Business Administration (SBA).


  • Don't become a public company unless you carefully consider the downside, such as informational filings, quarterly filings and audited financial statements -- plus serious consequences if you fail to meet the requirements of the SEC and the Financial Industry Regulatory Authority (FINRA), even accidentally. If you are a young company seeking funds to expand, consider a Reg. D 506 offering instead. This is a private offering that has no offering limit, and can be sold to 35 sophisticated non-accredited investors and an unlimited number of accredited investors.

About the Author

I have 14 years of experience working with alcoholics and would like to write about this subject. I have included some of my articles on business and Internet marketing, but I am also capable of writing and editing other subjects.

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