You can expect the actual IPO process to take at least six months. However, from the time you begin to make preliminary plans and assemble an IPO team, the process can easily consume a year - or more. While the actual timeline may vary, the steps will follow a certain chronological order.

Preparing the Registration Statement

During the first eight weeks of the process a number of important activities will be occuring concurrently. The most important of these will be the preparation of the registration statement required by the SEC. This will generally involve your internal management team as well as outside accountants and attornies. In addition to preparing the registration statement, these preliminary activities will include:

- Preparing the Service Agreements

- Selecting an Underwriter

- Identifying and Resolving Potential Issues

SEC Review

The second eight weeks will be dedicated primarily to the SEC review of your initial registration statement. The SEC is on its own timeline and is limited by its own internal bureaucracies and staffing considerations. You will have to exercise patience here. Attempting to rush the SEC will generally prove counterproductive. They will respond when they respond. You will definitely want to have a single point of contact with the SEC. Your accounting firm will generally be the best point of interface with the SEC through the process.

Ammendments to the Registration Statement

Once the SEC has completed its initial review of your registration statement it will issue a comment letter. This comment letter will highlight any deficiencies and request a number of proposed changes to the registration statement. Armed with this comment letter, your IPO team will be required to answer each of the concerns and make necessary changes before submitting an ammended registration statement.

The SEC approval process will be an iterative one. Each time the SEC reviews your ammended registration statement they will likely have additional comments. Each of these comments must be dealt with in a manner that is considered satisfactory to the SEC. Of course it is possible to challenge the SEC on some of its findings if the changes are considered to be too onerous. However, it should be remembered that the IPO will not proceed until you have the final blessing of the SEC. To the extent possible, you should attempt to comply directly with change requests. Gaining final approval may require submitting four or five revisions of the registration statement. As you get into the final stages of the approval process, many of the details and negotiations with the SEC will be handled more expeditiously over the phone. Again, the appropriate point of contact here is typically your accountant.

Issuance of a "Red Herring"

Once you get to a point with the SEC where you feel that there are no "material" concerns ramaining with the registration statement, your underwriter may advise you to issue a preliminary prospectus - commonly referred to as a "Red Herring." A "Red Herring" is a strawman prospectus that is sent out to prospective investors and appropriately caveated to ensure that investors know that it has not been formally approved by the SEC and that it is subject to change.

Roadshow

The roadshow is a critical part of drumming up investor support for the offering. Roadshows are very intense and heavily orchestrated. The roadshow is an opportunity for the senior management of your company (typically the CEO and CFO) and the underwriters to get out and present the business plan to investors around the country. As a general rule, the company management will perform the presentation. The underwriters will be there to gain insights into the attitudes of investors and to gauge levels of interest in the potential offering.

The roadshow circuit can be grueling. Fortunately it is relatively short-lived. Expect to do two or three presentations per day over a two or three week period. Increasingly, companies are taking advantage of the internet to put their road shows on-line. This allows a much greater level of penetration among potential investors than a physical roadshow allows by itself. During and immediately after the roadshow the underwriters will be working closely with investors to gain preliminary commitments for the offering. At the conclusion of this effort, the underwriters should have a pretty solid handle on how many shares they can sell and at what price.

Closing the Deal

Once final SEC approval has been obtained, and the roadshow is complete, it is time to close the deal. The time you have been waiting for has finally arrived. Prior to closing, the final price will be set by the underwriter and the final prospectus will be distributed to investors. The ultimate size and price of the offering will be determined by market supply and demand. At this point a pricing ammendment will also need to be provided to the SEC to reflect the final offering price.

If the groundwork has been properly done, then the closing will largely be a formality. However, it is important to understand that appropriate closing protocols and requirements must be strictly adhered to. You do not want to take a chance on derailing the process this late in the game. Under no circumstances can the closing occur until the SEC has declared the registration statement to be effective. Once the SEC has issued its final ruling and the pricing ammendment has been filed with the SEC, the final underwriting paperwork can be signed and the underwriter may commence the process of issuing shares and taking in the proceeds.