The expense of going public can be considerable - hundreds of thousands of dollars. It is not a decision to be taken lightly. Of course, most of the expenses of going public can be offset from the proceeds of the offering instead of being charged to your company's income statement. But the costs are real, and most of them will be paid for up-front. An unsuccessful IPO attempt could end up costing precious capital that could have been dedicated to growing your business.

Of course, every IPO is different, but most IPO expenses will fall into one of the following categories:

Underwriter Expenses

The commission that will be paid to the underwriter of the IPO will typically be the largest single cost that a company will incur in going public. The underwriter can be viewed as the market-maker for the stock of your firm. They will deal directly with investors to solicit participation. The underwiter will be responsible for determining the size and price of the offering, based on comparable transactions and preliminary investor commitments and reactions to your offering. Generally, the underwriter makes its fees by charging a percentage of the proceeds of the offering. However, if your offering is perceived to be small or risky, the underwriter may seek to mitigate its risk by structuring the fee in a different way - and requiring more of its fee in advance.

Legal Fees

Legal fees are an inevitable part of going public. It is important that all of the documentation is drafted properly and that you are complying with all regulatory requirements. While it is possible to minimize your legal expenses, this is not an area you will be able to cut too many corners on.

Accounting Fees

A good accounting firm will be critical to your IPO. The accountant will be heavily involved in preparing the registration statement and also in preparing the comfort letters that will be required for the underwriters. The underwriters will look to the accoutants and auditors to substantiate financial claims and projections contained in the prospectus.

Printing Costs

Printing costs can be a significant portion of the total expense of going public. For starters, not just any printer will do. Because confidentiality is so critical in the early stages of the IPO, underwriters will work only with specific printers who specialize in the production of IPO documents. Printing requirements will include the registration statement, the prospectus, the underwriting documents, and the stock certificates. The ultimate cost will vary depending on the size of the potential offering and how much color is used.

Liability Insurance

The cost of acquiring and carrying the necessary liability insurance for directors and officers of your company will also be substantial. You can typically expect an adequate level of coverage to cost $100,000 or more for a company going public.

Other Fees

In addition to the fees described above, there will be other fees and costs of a lesser magnitude. These fees include things such as:

- SEC Filing Fees

- Stock Exchange Listing Fees

- Registrar and Transfer Agent Fees

While a successful IPO can transform your company into a thriving concern, the costs are not insignificant. It is not a step to be taken without careful thought and planning.