116. What do you know about initial public offering (ip0)?

Initial Public Offering (IPO) is the first sale of stock by a private company to the public

Often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.

There are both advantages and disadvantages that arise when a company goes public.

Advantages: New capital (Almost all companies go public primarily because they need money to expand the business). Future capital (Once public, firms have greater and easier access to capital in the future). Mergers and acquisitions (Its easier for other companies to notice and evaluate a public firm for potential synergies)

Disadvantages of the IPO: Expensive (A typical firm may spend about 15-25% of the money raised on direct expenses). Reporting responsibilities (Public companies must continuously file reports with the SEC and the stock exchange they list on). Loss of control (Ownership is transferred to outsiders who can take control and even fire the entrepreneur).

IPO services include:

• An IPO Diagnostic to determine the readiness for IPO

• Tax and legal restructuring in preparation for IPO

• The IPО process

• IFRS reporting and fast close, to meet the exchanges’ requirements

• Listing requirements

117. What do you know about initial public offering ipo of Ukrainian securities?

Initial public offering (IPO) is very promising as it is one of the most effective methods to attract financial resources. IPO market is effective and promising for attraction of the foreign capital. The classic meaning of IPO (Initial Public Offering) is the initial public offering of the national shares in the international stock market with the aim to attract outward long-term investments.

National laws, particularly art. 28 of the Law of Ukraine on Securities and Stock Market, describes initial public offering as the method of securities issue that provides its carve-out on the basis of publication in mass media or by any other means of notification about the sale of securities addressed to initially determined number of persons.

IPO of Ukrainian securities was established since 2005. The Ukraine Opportunity Trust has attracted 32$ m from the IPO.

IPO requires from domestic companies to reorganize corporate structure in accordance with the international standards. Attraction of IPO-investments requires from company strict compliance with requirements to its transparency. Financial statements of the company shall comply with the principles of transparency and be prepared in accordance with legal requirements of the stock exchange's country. Thus, IPO in USA requires reconstruction of the financial statements in accordance with the accounting principles US GAAP. European stock exchanges require from companies compliance with the principles IFRS. Although the Ministry of Finance of Ukraine aims to bring closer national and international standards, quite small number of financial managers is able to practically apply IFRS standards. Depending on the requirements of the exchange, the company will need to submit its financial statements for the analysis. Usually the statements shall be submitted for the last three years and be transferred in accordance with IFRS or US GAAP. These statements shall by witnessed by the auditor upon inspection for the authenticity of the financial information included.