Technically speaking, owners cannot offer 100% of the company, because then, they would no longer own the company, and cannot control it. That's attempting to sell the company on the stock market, which is not possible. In an IPO, they must always retain a portion of the shares, or not offer the entire stake of 100%.
If he offered more than 50% of the company in an IPO, and he wanted to get back a 50% stake, he would have to buy enough shares to push his stake back to 50%.
Yes. The shares offered is entirely the owner's decision. The owner could choose to offer more shares later down the road in a public offering, but that is usually taken negatively by investors. It's best for John to have thought out the share count prior to the IPO.
1. Yes, he would own zero
2. No, he wouldn't buy, he would already have shares
3. Yes, the IPO almost never offers 100%. Insiders retain some percentage and may have control through another class of shares that have super-voting rights (e.g. one share = 10 votes)
Take a look at recent IPOs to see examples
1. Yes.
2. and 3. He can make sure there are 100 shares in the company before IPO then issue 100 new shares as part of the IPO. Then he would have 50%. Another possibilty would be to sell 50 of his shares into the IPO. If there are no new shares, he would also have 50%. Often is is a combination of both these alternatives.
Hello,
Assume the following:
John, owner of John's Burgers, decides to go public. He decides to release 100 shares at 10 dollars each.
Here are my questions:
1. Assuming all stock is bought by investors, is it correct to say that John will then own 0% of the company?
2. How would John go about still owning 50% of the company after the IPO? Would he have to buy and bid for the stocks like everybody else? Could he simply transfer 500 dollars (50 x 10 dollars) to the company's account and take 50 shares?
3. Is there any way that John could only say that he makes 50% of the company public. Could he sell 100 shares at 10 dollars, but say that those 100 shares correspond to only 50% of the company?
I read quite a bit on the IPO process, but these exact nuances weren't covered. Help is extremely appreciated.
Thank you for your time! :)
