Almost every entrepreneur knows that Delaware has the well-deserved reputation as the best state to incorporate and form an LLC. But did you know that Delaware is also the most popular state to file an IPO (initial public offering)? In fact, Delaware is the launching point for most of the recent large IPOs. According to recent reports, a Chobani IPO might be next.
An IPO is a type of offering where shares of stock are sold to the public on a securities exchange for the first time, which transforms the business into a "public" company. This can be a bit of a gamble, but many think the move is imminent for Chobani, which recently incorporated in Delaware.
Chobani is New York’s yogurt king, headquartered in Norwich, NY. The company, founded by Turkish immigrant Hamdi Ulukaya, is one of the top-selling Greek yogurt brands in the U.S.
The company's recent move, along with a recent $750 million loan from the private equity firm TPG, is fueling publicly mentioned rumors that Chobani is planning to begin an initial public offering or a stock market launch. Of course, these major moves often involve headaches. Founder Ulukaya’s former wife, suing for a stake in the company, is reportedly afraid that defaulting on the TPG loan, along with forming the Delaware company, will not be beneficial for her position. Chobani’s spokesman said that worry is baseless and stated, "Chobani became a Delaware limited liability company to permit greater flexibility in operating and growing its business."
Delaware attracts IPO candidates due to the flexible options surrounding the shares of stock, such as blank check preferred stock, founders’ stock, flexible voting and dividend rights, and ironclad shareholder agreements.
If the biggest yogurt IPO is imminent, it will join such popular giants as Facebook, Twitter, and Kayak, who operate from other states, but are incorporated in Delaware. By forming their company in Delaware, they benefit from the state’s modern and flexible corporate laws, highly respected Court of Chancery, business-friendly state government, and customer service-oriented staff of the Delaware Division of Corporations.
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.