O’Melveny Team Authors Article on Capital Structure for an IPO for the Deal Pipeline

September 14, 2011 O’Melveny & Myers’ partners Eric Sibbitt and Peter Ritter, along with associate Evan Pickering, coauthored an article on “Capital Structure and Tax Considerations for an IPO” for the September 13, 2011, issue of The Deal Pipeline. The article provides practical tips for companies looking to list shares on US exchanges, including how to simplify a complex capital structure by redeeming preferred stock or creating a dual-class stock structure. The authors also discuss other protections companies can create before starting the IPO process, including the adoption of special charter provisions or a rights plan (or poison pill) to reincorporating in another state that can be hardwired more easily pre-IPO.

The O’Melveny team further discusses the importance of setting the right number of shares and the price per share for the initial offering based on individual circumstances of the company. In addition to getting the capital structure and the share price in order, companies also need to look at their tax structure, according to the article. The authors talk about the impact of the offering on net operating loss carryforwards and tax status conversions.

Sibbitt is a member of the Corporate Finance Practice in O'Melveny's San Francisco office, Ritter is a tax partner in O'Melveny's San Francisco and Silicon Valley offices and Pickering is a transactions associate in San Francisco.