Running a Public Company

Steven M. Bragg, CPA, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young and an auditor at Deloitte & Touche. He received a master's degree in finance from Bentley College, an MBA from Babson College, and a bachelor's degree in economics from the University of Maine. He has been the two-time president of the Colorado Mountain Club, is an avid alpine skier and mountain biker, and is a certified master diver. Mr. Bragg resides in Centennial, Colorado. He is also the author of Accounting Best Practices and Accounting Policies and Procedures Manual, Fifth Edition (both published by Wiley).

• About the Author xiiiPreface xvPart I How to Go Public 1Chapter 1 The Initial Public Offering 3Introduction 3Reasons to Go Public 3Reasons Not to Go Public 5The Cost of an IPO 7Preparing for the IPO 7Finding an Underwriter 10Registering for and Completing the IPO 14Summary 18Chapter 2 Acquiring a Public Shell Company 19Introduction 19Pros and Cons of Acquiring a Public Shell Company 19The Mechanics of a Shell Company 21Summary 22Chapter 3 Listing on a Stock Exchange 23Introduction 23The Listing Process 23The American Stock Exchange 24The NASDAQ 27Overview 27The NASDAQ Capital Market 27The NASDAQ Global Market 27The New York Stock Exchange 29Comparing the Stock Exchanges 31Summary 33Part II Dealing with Investors 35Chapter 4 Investor Relations Overview 37Introduction 37Investor Relations Objectives and Goals 38Investor Relations Tools 39The Fact Sheet 41The Press Release 42The Annual Report 46The Annual Meeting 48The Company Web Site 49The Road Show 54The Conference Call 55Float Management 57Summary 59Chapter 5 The Investment Community 61Introduction 61The Analyst’s Perspective 61Finding the Right Analyst 63The Sell Side 64Analysts 64Brokers 67Investment Bankers 69Investor Relations Specialists 70The Buy Side 70Types of Investors 70Institutional Investors 71Individual Investors 73Investment Clubs 75Foreign Investors 76Presentations to Investors 76Summary 77Chapter 6 Regulation FD (Fair Disclosure) 79Introduction 79Policies 80Procedures 82Controls 83Summary 86Chapter 7 Stock Repurchases 87Introduction 87Impact on Earnings per Share 87Legal Ramifications 88SEC Reporting 89Adequate Disclosure and Repurchase Instructions 90Impact of Repurchases on Rule 13e-3 91Summary 91Part III Dealing with the Securities and Exchange Commission 93Chapter 8 Registration Statements 95Introduction 95Form S- 1 95Form S- 3 98Form S- 8 99The Shelf Registration 100Declaring a Registration Statement Effective 100Controls 101Summary 102Chapter 9 Regulation D (Sale of Unregistered Securities) 103Introduction 103Policies 104Procedures 105Controls 109Summary 112Chapter 10 Rule 144 (Registration Exemption for Resale of Securities) 113Introduction 113Procedures 115Controls 115Summary 117Chapter 11 Rule 10b5-1 (Stock Trading Plans) 119Introduction 119Policies 122Summary 123Chapter 12 Regulation A (Small Issue Exemption) 125Introduction 125Policies 127Procedures 127Controls 129Summary 132Chapter 13 Fedwire Payments 133Introduction 133Summary 135Chapter 14 Form 8-K 137Introduction 137Controls 144Summary 145Chapter 15 Insider Securities Ownership and Trading 147Introduction 147SEC Filing Codes 151Short-Swing Profits 153Short Sales by Insiders 154Policies 154Controls 154Summary 154Chapter 16 Proxy Solicitations 157Introduction 157Online Proxy Voting 161Policies 164Procedures 165Controls 169Summary 170Chapter 17 Regulation M-A (Mergers and Acquisitions) 171Introduction 171Policies 174Procedures 177Controls 179Summary 182Chapter 18 Private Securities Litigation Reform Act (Forward-Looking Statements) 183Introduction 183The Private Securities Litigation Reform Act 184Forward-Looking Statements 185Policies 188Procedures 189Controls 190Summary 193Chapter 19 Sarbanes-Oxley Act 195Introduction 195The Public Company Accounting Oversight Board 195Auditor Independence 197Corporate Responsibility 198Enhanced Financial Disclosures 201Analyst Conflicts of Interest 202Other Significant Parts of the Act 203Summary 204Part IV Special Accounting Standards for a Public Company 205Chapter 20 Interim Reporting 207Introduction 207Example of Interim Reporting of Various Expenses 208Second Example of Interim Reporting of Various Expenses 209Policies 210Procedures 210Controls 211Disclosures 212Summary 213Chapter 21 Segment Reporting 215Introduction 215Policies 217Procedures 219Controls 220Disclosures 220Summary 222Chapter 22 Earnings per Share 225Introduction 225The Simple Capital Structure 225Example of EPS Computation—Simple Capital Structure 226Preferred Stock Dividends Payable in Common Shares 230The Complex Capital Structure 231Example of the Impact of Contingent Stock Issuances on Earnings per Share 232Examples of EPS Computation—Complex Capital Structure 235Participating Securities and the Two-Class Method 240Example—Participating Convertible Preferred Stock 241Example—Participating Convertible Debt Instrument 242Example—Participating Warrants 243The Effect of Contracts That May Be Settled in Stock or Cash on DEPS 244Inclusions/Exclusions from Computation of DEPS 245The Effect of Contingently Convertible Instruments on DEPS 245Example—Contingently Convertible Debt with a Market Price Trigger 246Effect on EPS of Redemption or Induced Conversion of Preferred Stock 246Earnings per Share Implications of Share-Based Employee Compensation 247Presentation of Earnings per Share 248Controls 249Summary 250Chapter 23 Staff Accounting Bulletins 251Introduction 251Selected Staff Accounting Bulletins 252Summary 255Chapter 24 Regulation G (Non-GAAP Information) 257Introduction 257Policies 258Procedures 259Controls 261Reporting Examples 262Summary 264Part V Closing The Books of A Public Company 267Chapter 25 Constructing and Filing the Quarterly 10-Q and Annual 10-K Reports 269Introduction 269Constructing the SEC Filing 269Quarterly Auditor Reviews and Audits 276Quarterly Legal Review 279Officer Certification 279Audit Committee Approval 280EDGARizing 281Summary 283Chapter 26 Controls for Financial Reporting 285Introduction 285Controls for Financial Reporting 285Summary 295Part VI Going Private 297Chapter 27 How to Take a Company Private 299Introduction 299The Going Private Transaction 299Rule 13e-3 300Filling Out Schedule 13E-3 301Form 15 304The 300 Shareholder Limit 304Summary 305Appendix A Board Questionnaire 307Index 311