Becoming A Publicly Traded Company: Why You Need A Corporate Lawyer In The Mix

Going from a private company, where only a handful of people own the company and are invested in it, to a publicly traded company, where anyone can own shares of it, is a really big deal. It means that not only has your small company expanded out to a much larger one, but also that you want to help it grow and prosper by getting many small investors on board through owning shares. You and any business partners you have will still own controlling shares, but a lot more people out there will be able to buy a piece of the company through stocks. Here is why you definitely need a corporate lawyer to get involved.

The Articles of Incorporation

To become a publicly traded company, you first must become an incorporated company. That requires drawing up your company's ​Articles of Incorporation​ document, which lays out all of the ground work for incorporation. Most of these "articles" are pre-written by the laws in your state, but the rest rely on your particular company and what goods or services you provide. With a corporate lawyer's help, you can navigate through these uncharted waters to develop articles that are completely apropos for your company. The lawyer also needs to be present to make these articles, or operational by-laws, fully legal and binding to everyone in the company, past, present, and future.

Making Decisions on the Shares of Stock to Offer

What is a share of your company worth? Usually, that is determined by the growth exponential and the most recent four business quarters' worth of profits. A corporate lawyer can look at all of these numbers and crunch them for you to produce an evaluation of stock shares. Then you have to decide how many shares the company should be broken into, and what your rock-bottom minimal value per share is most comfortable for you. Maybe you will decide that ten dollars a share is a good starting point, and that it is in line with the value of the company. It also helps break your company up into a generous number of shares such that you and your business partners each get a fair share of stock while still offering the rest on the stock market.

Securing Your Spot on the Stock Market

There is a ton of legal paperwork your corporate lawyer has to file and clear before you can even announce that your company is "going public." Then you or the stock market creates and selects a trading symbol/abbreviation of company name to be listed on the U.S. stock exchange. You schedule a date to go live on the market, make your announcement, and then the shares are ready for purchase when the stock market opens that day.