Running a Public Company E-Book

Steven M. Bragg

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 433

Veröffentlichungsjahr: 2009

Beschreibung

Praise for Running a Public Company: From IPO to SEC Reporting "Steve Bragg's book is an essential read for anyone contemplating a public offering or taking on leadership responsibility in a public company. Not only does he explain the complicated aspects of registration and reporting, he provides practical examples of policies, procedures, and controls to keep a public company on the right track. This book is easy to follow and will continue to be a resource for the reader."--Tom Wilkinson , PMB Helin Donovan, LLP "I will recommend Running a Public Company: From IPO to SEC Reporting to my clients and consulting colleagues as an excellent resource. The book provides helpful guidance about the decision to go public, and about managing the requirements once a company is public. Steve Bragg's extensive knowledge stems from actual business experience, and his writing style makes a complex topic easier to follow and understand."--Valerie G. Walling, CPA, CMC, Management and Internal Controls Consultant "I highly recommend Steve's new book, Running a Public Company: From IPO to SEC Reporting, because it's a reference manual and insider's guide that contains a treasure trove of valuable insights certain to help managers, accountants, and attorneys navigate through the countless challenges that arise when taking (and keeping) a company public."--Matthew Posta, Esq., CPA, Vice President of Finance, Key Air, LLC "Mr. Bragg has done an excellent job of demystifying what is required to run your company and sell your stock in the public markets. I consider this a must-read for anyone considering a public offering or working with a public company."--Wray Rives, CPA "Running a Public Company: From IPO to SEC Reporting is an incredibly exhaustive guide to going public, spanning the process from first deciding to take the leap to filing with the SEC and everything in between--so comprehensive that it even includes the SEC's account number for paying filing fees! This is yet another Steven Bragg title for professionals that takes a complicated and oftentimes confusing process and breaks it down into simple, easy-to-follow steps. Should our company ever decide to make that jump, it is reassuring to know that Running a Public Company has laid out the path before us in perfect detail. Whether used as a reference or a guide, Mr. Bragg makes the process simple, clear, and amazingly straightforward."--Adrienne Gonzalez, Project Coordinator, Roger CPA Review, Chief Information Officer, JrDeputyAccountant.com "The first A to Z guide that I have seen. An excellent reference for management and investors alike."--Brian A. Lebrecht, Esq., President, The Lebrecht Group, APLC

Leseprobe

Table of Contents

Title Page

Copyright Page

About the Author

Free Online Resources by Steve Bragg

Preface

PART I - How to Go Public

CHAPTER 1 - The Initial Public Offering

Introduction

Reasons to Go Public

Reasons Not to Go Public

The Cost of an IPO

Preparing for the IPO

Finding an Underwriter

Registering for and Completing the IPO

Summary

CHAPTER 2 - Acquiring a Public Shell Company

Introduction

Pros and Cons of Acquiring a Public Shell Company

The Mechanics of a Shell Company

Summary

CHAPTER 3 - Listing on a Stock Exchange

Introduction

The Listing Process

The American Stock Exchange

The NASDAQ

The New York Stock Exchange

Comparing the Stock Exchanges

Summary

PART II - Dealing with Investors

CHAPTER 4 - Investor Relations Overview

Introduction

Investor Relations Objectives and Goals

Investor Relations Tools

Float Management

Summary

CHAPTER 5 - The Investment Community

Introduction

The Analyst’s Perspective

Finding the Right Analyst

The Sell Side

The Buy Side

Summary

CHAPTER 6 - Regulation FD (Fair Disclosure)

Introduction

Policies

Procedures

Controls

Summary

CHAPTER 7 - Stock Repurchases

Introduction

Impact on Earnings per Share

Legal Ramifications

SEC Reporting

Adequate Disclosure and Repurchase Instructions

Impact of Repurchases on Rule 13e-3

Summary

PART III - Dealing with the Securities and Exchange Commission

CHAPTER 8 - Registration Statements

Introduction

Form S-1

Form S-3

Form S-8

The Shelf Registration

Declaring a Registration Statement Effective

Controls

Summary

CHAPTER 9 - Regulation D (Sale of Unregistered Securities)

Introduction

Policies

Procedures

Controls

Summary

CHAPTER 10 - Rule 144 (Registration Exemption for Resale of Securities)

Introduction

Procedures

Controls

Summary

CHAPTER 11 - Rule 10b5-1 (Stock Trading Plans)

Introduction

Policies

Summary

CHAPTER 12 - Regulation A (Small Issue Exemption)

Introduction

Policies

Procedures

Controls

Summary

CHAPTER 13 - Fedwire Payments

Introduction

Summary

CHAPTER 14 - Form 8-K

Introduction

Controls

Summary

CHAPTER 15 - Insider Securities Ownership and Trading

Introduction

SEC Filing Codes

Short-Swing Profits

Short Sales by Insiders

Policies

Controls

Summary

CHAPTER 16 - Proxy Solicitations

Introduction

Online Proxy Voting

Policies

Procedures

Controls

Summary

CHAPTER 17 - Regulation M-A (Mergers and Acquisitions)

Introduction

Policies

Procedures

Controls

Summary

CHAPTER 18 - Private Securities Litigation Reform Act (Forward-Looking Statements)

Introduction

The Private Securities Litigation Reform Act

Forward-Looking Statements

Policies

Procedures

Controls

Summary

CHAPTER 19 - Sarbanes-Oxley Act

Introduction

The Public Company Accounting Oversight Board

Auditor Independence

Corporate Responsibility

Enhanced Financial Disclosures

Analyst Conflicts of Interest

Other Significant Parts of the Act

Summary

PART IV - Special Accounting Standards for a Public Company

CHAPTER 20 - Interim Reporting

Introduction

Example of Interim Reporting of Various Expenses

Second Example of Interim Reporting of Various Expenses

Policies

Procedures

Controls

Disclosures

Summary

CHAPTER 21 - Segment Reporting

Introduction

Policies

Procedures

Controls

Disclosures

Summary

CHAPTER 22 - Earnings per Share

Introduction

The Simple Capital Structure

Example of EPS Computation—Simple Capital Structure

The Complex Capital Structure

Participating Securities and the Two-Class Method

Example—Participating Warrants

The Effect of Contracts That May Be Settled in Stock or Cash on DEPS

Inclusions/Exclusions from Computation of DEPS

The Effect of Contingently Convertible Instruments on DEPS

Effect on EPS of Redemption or Induced Conversion of Preferred Stock

Earnings per Share Implications of Share-Based Employee Compensation

Presentation of Earnings per Share

Controls

Summary

CHAPTER 23 - Staff Accounting Bulletins

Introduction

Selected Staff Accounting Bulletins

Summary

CHAPTER 24 - Regulation G (Non-GAAP Information)

Introduction

Policies

Procedures

Controls

Reporting Examples

Summary

PART V - Closing the Books of a Public Company

CHAPTER 25 - Constructing and Filing the Quarterly 10-Q and Annual 10-K Reports

Introduction

Constructing the SEC Filing

Quarterly Auditor Reviews and Audits

Quarterly Legal Review

Officer Certification

Audit Committee Approval

EDGARizing

Summary

CHAPTER 26 - Controls for Financial Reporting

Introduction

Controls for Financial Reporting

Summary

PART VI - Going Private

CHAPTER 27 - How to Take a Company Private

Introduction

The Going Private Transaction

Rule 13e-3

Filling Out Schedule 13E-3

Form 15

The 300 Shareholder Limit

Summary

APPENDIX A - Board Questionnaire

Index

This book is printed on acid-free paper.

Copyright © 2009 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Bragg, Steven M.

Running a public company : from IPO to SEC reporting / Steven M. Bragg.

p. cm.

Includes index.

eISBN : 978-0-470-52728-3

1. Going public (Securities) 2. Corporations—Finance. 3. Corporations. I. Title.

HG4028.S7B73 2009

658.15—dc22 2009010820

About the Author

Steven M. Bragg, CPA, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young and auditor at Deloitte & Touche. He received a master’s degree in finance from Bentley College, an MBA from Babson College, and a Bachelor’s degree in Economics from the University of Maine. He has been the two-time President of the Colorado Mountain Club, and is an avid alpine skier, mountain biker, and certified master diver. Mr. Bragg resides in Centennial, Colorado. He has written the following books:

Accounting and Finance for Your Small BusinessAccounting Best PracticesAccounting Control Best PracticesAccounting Policies and Procedures ManualAdvanced Accounting SystemsBilling and Collections Best PracticesBusiness Ratios and FormulasController’s Function, TheController’s Guide to CostingController’s Guide to Planning and Controlling OperationsController’s Guide: Roles and Responsibilities for the New ControllerControllershipCost AccountingEssentials of PayrollFast CloseFinancial AnalysisGAAP GuideGAAP Policies and Procedures ManualInventory AccountingInventory Best PracticesInvestor RelationsJust-in-Time AccountingManagement Accounting Best Practices

Managing Explosive Corporate GrowthMergers and AcquisitionsNew CFO Financial Leadership Manual, TheOutsourcingPayroll AccountingPayroll Best PracticesRevenue RecognitionRun the RockiesRunning a Public CompanySales and Operations for Your Small BusinessUltimate Accountants’ Reference, TheThroughput Accounting

Free Online Resources by Steve Bragg

Steven Bragg issues a free accounting best practices podcast. You can sign up for it at www.accountingtools.com, or access it through iTunes.

Preface

The managers of a private company face a steep learning curve in making the transition to a publicly held company. Running a Public Company: From IPO to SEC Reporting shortens this learning curve dramatically by itemizing key steps in the process of going public, handling investors, and dealing with the Securities and Exchange Commission (SEC). The book goes on to describe special accounting standards that only apply to public companies, as well as how to create periodic financial reports and the control systems for those reports. And, if the effort of being publicly held turns out to be too great, the book concludes with information about how to take the company private again.

The book is divided into six sections, each dealing with one of the preceding topics. In Part I, we describe each step in the initial public offering process and also describe the alternative route of acquiring a public shell company. Irrespective of the method of going public, we also describe the American, NASDAQ, and New York stock exchanges and the process required to be listed on them.

In Part II, we describe how to deal with the investment community. This includes an overview of investor relations: why it is needed, its goals and objectives, and the tools available to the investor relations officer. It also describes the buy side and sell side players in the investment community and how to present to them. There is an entire chapter discussing the dictates of Regulation FD (Fair Disclosure) and the specific policies, procedures, and forms needed to stay in compliance with it. Finally, this section addresses why a company would buy back its shares, the legal ramifications of doing so, and how this information must be reported to the SEC. For further information about investor relations, please refer to the author’s Investor Relations: The Comprehensive Guide.

In Part III, we describe the multitude of situations in which a company must interact with the SEC. This includes the registration of newly issued equity securities, as well as several key exemptions that greatly reduce the registration reporting requirements. There is also a discussion of Rule 144, which governs the holding period before which unregistered stock can be sold, as well as the use of stock trading plans. The SEC charges a fee to examine registration applications, so the method for paying the SEC through its Fedwire system is also addressed.

Part III goes beyond stock registration to also address a variety of ongoing reporting requirements through the Forms 8-K, 3, 4, and 5. This includes the types of events that must be reported and examples to use and which entities and individuals must file them. In addition, it covers the contents and timing of a proxy solicitation and the specific procedure for undertaking one. Also, in case a company wishes to acquire or be acquired by another company, the filing requirements for reporting this situation to shareholders are described.

Part III also includes two key pieces of legislation. The first is the Private Securities Litigation Reform Act, which created a safe harbor for forward-looking statements. The second is the Sarbanes-Oxley Act, which was a broad-based upgrade to a variety of auditing, control, and disclosure requirements for public companies.

In Part IV, we describe the three key accounting standards that apply specifically to public companies: interim reporting, segment reporting, and earnings per share. We also describe the SEC’s Staff Accounting Bulletins and summarize the more important ones. The section concludes with a discussion of Regulation G, which provides guidelines for how to report nonstandard accounting information in financial reports.

Part V covers the key area of constructing a public company’s quarterly 10-Q and annual 10-K reports, including the contents of these reports, the process for doing so, and ways to reduce the duration of this process. Another chapter contains a system of controls for financial reporting, to ensure that the financial statements and related disclosures will fairly present the company’s financial condition.

Finally, Part VI describes how to take a public company private, and how to fill out the necessary forms for doing so.

The book answers a multitude of questions involved in running a public company, such as:

• Why would I buy a shell company?

• How do I file for a listing on a stock exchange?

• What should I put in the investor relations section of my Web site?

• What is a road show and how is it conducted?

• How do I manage an investor conference call?

• How do I deal with analysts, brokers, institutional investors, and individual investors?

• How do I impart information to investors while staying in compliance with Regulation FD?

• What are the various methods for registering stock and which ones are available to me?

• What procedures do I use to raise money from private investors?

• When do I issue an investor qualification certificate?

• What are the advantages of having a shelf registration?

• How long must holders of unregistered stock wait before they can sell their shares?

• How do I file a Rule 10b5-1 stock trading plan?

• How do I obtain SEC filing codes?

• How do I deal with a stock transfer agent?

• What language do I need to attach to a forward-looking statement to reduce my liability?

• How must I structure the internal audit committee to be in compliance with the Sarbanes-Oxley Act?

• How do I determine a reportable business segment?

• How do I calculate basic and diluted earnings per share?

• How do I reconcile non-GAAP information back to a standard GAAP measure?

• What information is included in a 10-K report, but not in a 10-Q report?

The information in this book is supplemented by those policies, procedures, controls, forms, reports, and flowcharts needed to ensure that a company can set up a proper system of controls to comply with all regulations needed to operate successfully as a public company.

In short, Running a Public Company: From IPO to SEC Reporting is the ideal sourcebook for the mechanics of how to go public and stay there, while complying with all applicable regulations.

Steven M. Bragg Centennial, Colorado February 2009

PART I

How to Go Public

CHAPTER 1

The Initial Public Offering

Introduction

The initial public offering (IPO) is considered by many business owners to be the true sign of success—they have grown a business to the point where its revenue volume and profitability are large enough to warrant public ownership. However, the road to an IPO is both expensive and time consuming and requires significant changes to a company. This chapter describes the pluses and minuses of being public, as well as the steps required and costs to be incurred in order to achieve that goal.

Reasons to Go Public

Though a management team may not say it, a major reason for going public is certainly to create a market for the shares they already own. Though these shares may not be available for sale for some time after the IPO, management will eventually be able to cash in its shares and options, potentially generating considerable profits from doing so. This reason is not publicized to the public, since the public would be less likely to invest if investors think the management team is simply cashing in and then leaving the business.