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Going Public: The Four Categories Of Cost
by Joel Arberman, Joe
1. The accounting fees:
When a private company goes public, they must obtain financial audits. These audits are incorporated into a registration statement that is subsequently filed with the United States Securities and Exchange Commission.

The cost of financial audits have a significant range. There are several factors that influence the cost of financial audits:
a) are the corporate books and records organized?
b) does the company have an internal ability to generate an income statement, balance sheet and statement of cash-flows?
c) have their financial records been kept by a CPA?
d) have their financial records been reviewed by an accounting firm?
e) have their financial records been audited in the past?

The answers to these questions will largely determine the cost of financial audits. Other factors include the length of time a company has been in business and the industry it is in.

The financial audits can cost from as little as $2,500 for a complete start-up to $35,000 for a fairly simple business that is generating a few million in sales, to hundreds of thousands of dollars for larger and more complex businesses.

2. The legal fees:
When a private company goes public, there are a number of legal issues that must be handled. The primary document that is created is called the registration statement.

The organization, preparation and drafting of the registration statement can cost from as little as $25,000 for a complete start-up to $45,000 for a fairly simple business that is generating a few million in sales, to $150,000+ for larger and more complex businesses.

3. The miscellaneous fees:
When going public, private companies must pay for a number of miscellaneous fees. These would include filing fees, application fees and third-party fees that are a required part of the process.

The miscellaneous fees generally range from $7,000 on the low end to $15,000+ for a mid sized company. Larger companies may end up paying much more.

4. Professional advisor fees:
Companies going public often engage professional advisors that can navigate the way through the complex and time consuming process.

Professional advisor fees are generally structured as part cash and part equity. These fees vary based on the size, scope and complexity of the business going public.

In aggregate, it can cost as little as $65,000 to hundreds of thousands of dollars to take a private company public. However, the benefits very often outweigh the costs.
Joel Arberman has sinced written about articles on various topics from Bird Flu, Initial Public Offering and Investments. Joel Arberman is the Managing Member of Public Financial Services, LLC. We help private companies through the process of becoming publicly traded via an initial public offering or direct public offering. Learn more at. Joel Arberman's top article generates over 27100 views. to your Favourites.
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