When Your S-1 Flips to Public from Confidential

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Filing Form S-1 with the SEC

Form S-1 is a filing with the Securities Exchange Commission (SEC) used by private companies planning to go public, and it is comprised of business and financial information. The S-1 offers an in-depth, first look at a private company, and analysts and portfolio managers often use it when making investment decisions. With the signing of the JOBS Act in April 2012, emerging growth companies (companies with less than $1 billion in annual revenue) were given the ability to file their Form S-1 on a confidential basis. In July 2017, the SEC changed its rule and now offers every private company the ability to file a confidential Form S-1. We expect most, if not all, private companies that want to become public to submit their S-1 as a confidential filing.

Below are some advantages of a confidential Form S-1 filing.

  • “Test the waters” with potential institutional investors. Corporate management can meet with potential investors to gauge the interest in their company. If feedback is not as positive as they had hoped, the company can abandon its offering before its registration statement becomes effective. Consequently, its submission will remain confidential.
  • Get feedback from the SEC. Filing a confidential S-1 gives the company the ability to receive feedback from the SEC without anyone outside the firm knowing.
  • No media, investor, or competitors. A confidential S-1 filing keeps business and financial information private, limiting the amount of time the media, investors, and competitors have to scrutinize the information in the filing. While this information could eventually become public, it will remain private if management decides to postpone or cancel its offering.

The Flip to a Public S-1 Filing from a Confidential Filing

The decision to convert an S-1 filing to public from confidential should not be taken lightly, as it sets off a chain of events. As part of the SEC rule on confidential S-1 filings, companies must unveil their financials at least 15 days prior to the start of their investor roadshow, allowing potential investors time to review the filing before a potential meeting with the company. Based on recent history of confidential filings, most companies commence their roadshow the day after the mandatory waiting period.

With the switch from a confidential to a public S-1 filing typically comes an influx of media and investor requests. While the company is technically in a “quiet period” once it hires an investment bank to begin the IPO process, remaining quiet becomes more difficult once the filing becomes public. Companies should have a plan in place regarding which corporate officers are the official spokespersons for the firm, and only these persons should speak for the company. Having a solid communication plan in place can help prevent “gun jumping,” or in general terms, a violation of communication restrictions. A solid communication plan can prevent the SEC from misconstruing any communication with someone outside the firm as promoting the offering, which could delay or ultimately derail its IPO.

Filing an S-1 with the SEC can be very exciting for a private company, but with this filing comes SEC rules and regulations. Being prepared and partnering with an experienced and knowledgeable investor relations firm can make the difference between a successful and unsuccessful S-1 filing and IPO.

Greg Chodaczek, Managing Director

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