Chapter 17 Quiz

Going public entails disadvantages such as

- A public company must meet a host of legal obligations - A public company is in the public scrutiny - The IPO process is expensive - All the above

The due diligence review often includes discussions with:

- Key customers - Suppliers - Licensors - All the above

X Company wants to go through an IPO. To arrange and facilitate the financing of the IPO they should hire:

An investment bank

GS Investment Bank would like to minimize the risks associated with an IPO of Company X's stock. GS Investment should offer to provide a:

Best efforts offering

The board of directors of X Corporation would like to immunize themselves of any liability arising from any material misrepresentations or omissions during the preparation of the IPO prospectus. They may avoid this liability by establishing that they undertook a reasonable investigation that would lead a reasonable person to believe the statements were accurate. This is known as a:

Due diligence defense

X Company would like to minimize risk and assure that the IPO is completed through an investment bank that agrees to buy the company shares for resale to investors. X Company should procure a:

Firm commitment offering

The JOBS Act created a new category of securities issuer, called a(n):

Funding portal / emerging growth company (EGC)

An IPO working group consists of all of following except

Journalists

X Company is preparing its IPO prospectus and is informed by its attorneys that the company needs to discuss the board's role in risk oversight ad enterprise risk management. This discuss would be best placed within the section of the

Management section

During a road show with investors, the company would like to distribute information. The company may distribute:

Public info and the prospectus

A preliminary prospectus is also known as a:

Red herring

X Company is in the process of going through an IPO. They have just been advised that they were awarded a patent. As its preparing to write a routine press announcement, the company should:

Solely discuss the issuance of the patent as a factual business development

The role of the book-running managers is to position the company in the public market and to form a _____ of investment banks to participate in the offering.

Syndicate

Going public offers a company the following advantages, except:

The ability to borrow at a lower interest rate