What does a self-underwritten IPO cost?
Fees and expenses for completing a self-underwritten IPO are the lowest of all the methods of going public. Transactions may be completed for under $200,000 from beginning to end, which is much less than a traditional IPO. While this is the minimum initial cash outlay for completing a transaction, the company must also consider the cost of the equity that it will have to give up as part of transaction. This equity is generally between 5% and 10% on a fully diluted basis. While this doesn’t cost the company hard cash, the stock could be worth quite a bit, depending on the success of the merged company. If the Company raises funds through equity transactions, the original shareholders will be diluted further. It is important to understand, however, that being public means that the original owner(s) give up ownership to the public in exchange for funding or other like kind services. The stock itself becomes a currency for the Company, which is the main reason for going public.
