So I go out and build a company using my handy dandy personal savings of $1000. The company does some service and I have maybe a few employees. Now, once the business is off the ground, I wanna make it public. I wanna know how does this process work? Do I go to the closest broker and ask him to divide my company into 1000 shares of a dollar each and then sell 499 of those shares on the open market at some stock exchange of my choice?
I can understand that as my business continues the company might not be worth $1000. What happens to the stocks then? I just need a run down of how companies go public? Who has a say in how many shares it should be divided into for how much? etc. etc.
So I read the article but it only explains how the 'worth' of a company is determined. But what about stocks? How are they determined? Who handles these things?
Well, if I remember right…the minimum worth of shares to be issued at conversion was 50,000 pound… you say you set up your business with 1000 dollars so I guess its just way too small to become public yet
The price of shares, like ALL prices, is controlled by supply and demand :D, the latter being more relavent in this case. The better your company performs, the more efficient it is, the more profits it makes, and therefore investors would see a greater chance for themselves to earn large profits by buying your shares, so share prices are proportional to your companies performance.
I suggest you convert to a partnership, that is the best “upgrade” for a sole trader. After the partnership comes upgrading to private limited company, and then to public limited!
The procedure (as per british law) is kinda complicated but here goes…
A statement to the Memorandum of Association stating that the business is now a public limited company must be made.
A certain minimun value of shares must be issued (50,000 punds in UK)
Accounts must be laid out in a manner in which they are madle available to members of the general public.
The company then applies at the stock-exchange for a listing.
After this a prospectus is issued, which is an invitation ot the general public to buy your shares and it basically include detailed accounts of the business, past records and plans, etc
Phew…I donot know how exactly this procedure differs from the American way…probably not much…
