The IPO process is divided into three distinct parts:
In this “quiet period,” a company contracts with the investment banking firm (which acts as a managing underwriter) and decides to proceed with the public offering. They file a registration statement with the SEC, and limits are placed on the company’s public communications.
The waiting period begins from the date of the registration statement with SEC to its effective period. During this period, the company is only permitted to make oral offers or certain written offers. Moreover, by conforming to certain conditions, a company can take part in written communications regarding the selling or buying of securities relating to a registered offer. Furthermore, the company is also not allowed to enter any binding agreements about the sales of the securities.
Pricing and Post-Effective Period:
The post-effective period starts as soon as the registration statement is declared effective by the SEC and ends with the completion of the offering. At this point, the underwriters are no longer required to deliver a prospectus according to the Securities Act. During this period, sales and certain communications such as free writing prospectuses (for an IPO issuer, it must be accompanied or preceded by a final prospectus) are allowed.