Step 8: Approval By the SEC

Although it may feel like you will never satisfy the SEC, the day does finally come when you hear the good news that the SEC has approved your registration. This sets off a flurry of important meetings to make final decisions about the pricing and terms of the stock offering.

Step 9: Final Pricing

Now comes a crucial decision that has been hanging in the air for weeks: What is the right price for the stock? Technically, it is the underwriter’s job to analyze market conditions and demand, decide what the stock is worth, and set the final offering price. However, this is usually discussed in a meeting with company management, where all opinions are aired and every issue is carefully weighed.

Once the price is determined and terms are set, a “pricing amendment” is drawn up by the lawyers and submitted to the SEC with a request for acceleration of effectiveness. When the SEC issues the order stating that the registration statement is “effective,” the stock can begin trading the next day.  The light is green and all systems are “go.”