Ipo Jetblue

IPO stands for initial public offering. It is the process that a company must go through in order initially sell publicly traded equity. “It is primarily for raising additional capital or funds for a company that will be used to sustain its growing needs (production, distribution, and others). The term merely applies to initial issuance of common shares to interested public investors (Initial-Public-Offering-Process, para. 5).”

The process, which takes one hundred days, or more, begins with choosing a bank, or banks, to act as an advisor, and underwriter. The underwriter drafts a letter of intent. A registration statement needs to be filed with the Securities and Exchange Commission, also known as the SEC. There are two parts to the registration statement, the prospectus, and information that is made accessible for public inspection by the SEC. These disclosure requirements make sure that the public has correct information pertaining to the sale of the offered securities. The underwriter needs to verify this information by investigating the company (Ellis, K., et al, 1999).

The registration statement, once filed with the SEC, becomes the preliminary prospectus. The primary prospectus is used as a marketing tool. When the registration statement becomes effective, the preliminary prospectus is converted to the prospectus, which is the official offering document. Then, the offering is marketed, which is called a “road show.” The registration and marketing can take several months (Ellis, K., et al, 1999).

The day before the effective date, but after the market closes, the company and the underwriter decide the exact number of shares to be sold, as well as the price those share will be offered to the public. After the final terms are hammered out, the underwriting agreement is executed; the final draft of the prospectus is printed; and a price amendment is filed on the morning of the chosen effective date (Ellis, K., et al, 1999).

After SEC...