Difficulty: Moderately Challenging
Buy IPOs Directly From a Company Through Self Distribution Of Stock
Step1
Tell your broker that you are interested in IPOs. While many investment banks and brokerage firms reserve IPOs for their richest clients, self distribution IPO transactions are done by the company selling stock and are available to anyone who has knowledge of them. Your broker should keep you aware of any self distribution IPOs.
Step2
Build contacts and relationships with local businesses. Often you can only participate in self distribution of stock IPOs if you have insider knowledge of the company. It's true that IPOs are listed on small stock exchanges, but that only tells you about the stock's price, not about its availability.
Step3
Help out these businesses when they are looking for venture capital. Before a company goes public, it often has to do several rounds of fund-raising through venture capitalists. If you can invest in companies this way, you'll likely have advance knowledge of a self distribution IPO, should one happen.
Step4
Find out who to talk to about buying these stocks. In a self distribution IPO, you have to buy the stock directly from the company, not from an underwriter. The company's financial officers should be able to tell you how many stocks are available and for what price.
Step5
Buy your stocks through the company and then hold on to them for the required time. In addition to the federal law that prohibits disclosing IPO gains for 40 days, most IPOs require that you hold on to the stocks for 60 to 90 days. This rule stops investors from selling stocks shortly after the company goes public and the stock price rises.