Randy$$s$,$ a family$-$owned restaurant chain operating in Alabama, has grown to the point that expansion throughout the entire Southeast is feasible. The proposed expansion would require the firm to raise about $$18\mathrm{.}3$ million in new capital. Because Randy$$s currently has a debt ratio of $50\%$ and because family members already have all their personal wealth invested in the company, the family would like to sell common stock to the public to raise the $$18\mathrm{.}3$ million. However, the family wants to retain voting control.

You have been asked to brief family members on the issues involved by answering the following questions.

$1.$What agencies regulate securities markets?

$2.$How are start$-$up firms usually financed?

$3.$Differentiate between a private placement and a public offering.

$4.$Why would a company consider going public? What are some advantages and disadvantages?

$5.$What are the steps of an initial public offering?

$6.$What criteria are important in choosing an investment bank?

$7.$Would companies going public use a negotiated deal or a competitive bid?

$8.$Would the sale be on an underwritten or best efforts basis?

$9.$ What is a roadshow? What is book$-$building?

$10.$Describe the typical first$-$day return of an IPO and the long$-$term returns to IPO investors.

$11.$What are the direct and indirect costs of an IPO?