Step 5: The Preliminary Filing

When the IPO team is satisfied that it has done the best job possible drafting the registration statement and prospectus, the documents are filed with the SEC for review. It usually takes the SEC about 30 days to give an official response to the preliminary filing.

This preliminary prospectus is also referred to as a “red herring” because of the red ink used on the front page to indicate that some information such as the price and share amounts are still subject to change. While waiting for the SEC’s comments on the preliminary filing, copies of the “red herring” are often sent out to other underwriters and major investors who might want to purchase large blocks of stock for resale.

Now the IPO team turns its attention to a new priority — preparing the “road show,” which is an intense marketing effort designed to attract investors.