Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Company’s Direct IPOs: Should You Take the DIY Route?

Author: Dan Brecher

Date: August 22, 2013

Key Contacts

Back

Most companies that undertake an initial public offering (IPO) partner with an investment bank to serve as an underwriter.

The role of the underwriter includes helping to establish the initial share price and the public market, as well as seeking to interest analysts to follow the stock.

DYI IPO
Photo by Jasmin Schreiber on Unsplash

In the midst of the growing crowdfunding buzz, direct public offerings (DPO) have recently come back into vogue. In a Do-It-Yourself (DIY) DPO, the business sells shares directly to the public without using an investment bank as the middleman. Purchasers may include friends, family, customers, employees and other third parties. Well-known companies that have used direct public offerings include ice-cream giant Ben & Jerry’s and organic macaroni and cheese maker Annie’s Homegrown.

There are several reasons why a company may elect to undertake this type of IPO, in addition to setting its own pricing for the value of the business. Like a traditional IPO, the benefits include access to capital, the ability to offer stock incentives to employees, the added currency for corporate acquisitions, and the clout of being a publicly traded company.

In general, DPOs are less costly to conduct and can avoid many of the cumbersome registration and disclosure requirements associated with a traditional IPO. For instance, certain exemptions from federal securities laws are available to small and mid-size businesses seeking to conduct smaller offerings, companies with solely intrastate operations and non-profit enterprises. Companies may also explore the DIY IPO route after failing to attract an investment bank to underwrite the transaction.

Of course, there are also downsides. Because companies do not partner with an investment bank or broker-dealer, they must do a lot of the legwork in-house, and should consult with an experienced guide through this briar patch. Marketing the IPO can be both expensive and time-consuming, particularly for businesses that are not well established. The after-market can be a mine field for the uninitiated, particularly if there is an inability to attract a following of analysts or after-market broker interest in trading the stock.

While the growth of social media and online platforms catering to DPOs has made the process more manageable, there is also the old-fashioned approach. For Annie’s Homegrown and New York beer company Spring Street Brewery, the best way to reach investors was advertising the public offering on the product itself.

If you have any questions about company direct IPOs or would like to discuss the legal issues involved, please contact me, Dan Brecher, or the Scarinci Hollenbeck attorney with whom you work.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Scarinci Hollenbeck Expands NYC Real Estate and Litigation Practices ADDING four litigators post image

Scarinci Hollenbeck Expands NYC Real Estate and Litigation Practices ADDING four litigators

NYC Real Estate and Litigation Attorney Ryan O. Miller and Team Join Scarinci Hollenbeck, LLC New York City, NY – August 13, 2025 – Scarinci Hollenbeck, LLC has strengthened its Real Estate and Litigation practices with the addition of four New York City-based attorneys. Ryan Miller, who joins as a partner, is well known for […]

Author: Scarinci Hollenbeck, LLC

Link to post with title - "Scarinci Hollenbeck Expands NYC Real Estate and Litigation Practices ADDING four litigators"
What is Business Law and Why Is it Important? post image

What is Business Law and Why Is it Important?

Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]

Author: Dan Brecher

Link to post with title - "What is Business Law and Why Is it Important?"
Corporate Transactions: Best Practices for Successful Deals post image

Corporate Transactions: Best Practices for Successful Deals

Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]

Author: Dan Brecher

Link to post with title - "Corporate Transactions: Best Practices for Successful Deals"
How to Conduct a Fair and Legal Employee Termination in 2025 post image

How to Conduct a Fair and Legal Employee Termination in 2025

Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]

Author: Angela A. Turiano

Link to post with title - "How to Conduct a Fair and Legal Employee Termination in 2025"
Admin Dissolution for Annual Report: What You Need to Know post image

Admin Dissolution for Annual Report: What You Need to Know

While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]

Author: Dan Brecher

Link to post with title - "Admin Dissolution for Annual Report: What You Need to Know"
What Is Antitrust Litigation Law? post image

What Is Antitrust Litigation Law?

Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]

Author: Robert E. Levy

Link to post with title - "What Is Antitrust Litigation Law?"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form. By providing a telephone number and submitting this form you are consenting to be contacted by SMS text message. Message & data rates may apply. You can reply STOP to opt-out of further messaging.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!