Confidential vs. Public Filing of Initial Draft Prospectus: Strategic Considerations for IPOs and De-SPAC Transactions

For companies preparing to enter the public markets—whether through a traditional initial public offering (“IPO”) or a business combination with a special purpose acquisition company (“SPAC”)—a key early decision involves whether to file the initial draft registration statement (either on the Form S-1 or Form S-4) with the U.S. Securities and Exchange Commission (“SEC”) confidentially or publicly. This decision carries significant implications for timing, market perception, and the ability to manage regulatory uncertainty.

Availability of Confidential Submissions

Since the enactment of the JOBS Act in 2012, confidential submissions have become a widely used mechanism for companies pursuing IPOs. Emerging Growth Companies (“EGCs”) have the express right to submit their IPO registration statements confidentially. As of 2017, this option was extended to non-EGCs as well, provided the first public filing is made at least 15 days before a roadshow or the registration statement becomes effective. The SEC also allows confidential submissions for target companies in de-SPAC transactions, making it a valuable tool for private companies seeking to enter the public market via business combination.

Managing Timing and Uncertainty

One of the most compelling reasons to file confidentially is the flexibility it affords in managing regulatory timing and uncertainty. Filing confidentially allows a company to start the SEC review process without triggering public scrutiny or market speculation. This is particularly important in transactions where timing is critical, such as de-SPAC deals, where parties often work against a limited window before the SPAC’s outside date or redemption deadline.

In business combination scenarios, a company may file a confidential draft registration statement even before its interim financial statements or audit updates are finalized. This enables the SEC to begin its review of the narrative and non-financial sections of the prospectus, allowing the company to address early comments in parallel with the financial statement preparation. By the time the updated financials are ready, the company may already have resolved a significant portion of SEC comments, allowing the next filing—often made publicly—to be more complete and closer to effectiveness. This can save valuable time and help preserve deal certainty in transactions where time is of the essence.

Preemptive Management of SEC Comments

Another key advantage of confidential submission is the ability to preemptively manage SEC comments. When a company is unsure how the SEC will respond to specific disclosures—such as non-GAAP measures, novel business models, or complex related-party transactions—a confidential filing allows those issues to be addressed in a non-public setting. This reduces the risk of reputational damage or media attention resulting from prolonged or contentious comment periods. Once comments are cleared or narrowed, the public version of the filing can present a cleaner and more refined disclosure package to investors. However, please note, once the company files publicly, all prior confidential submissions will become public as well.

Discretion and Competitive Sensitivity

For early-stage or high-growth companies, confidential filings also help preserve sensitive business information. Whether it is intellectual property strategies, customer concentration, or evolving regulatory risks, keeping disclosures out of the public domain until closer to the launch date helps avoid giving competitors early insight into the company’s operations. In a de-SPAC context, where many target companies are new to public company disclosures, the confidential path offers a more controlled environment in which to refine materials with legal, financial, and auditing teams before releasing them to the public markets.

Investor Relations and Perception

Public filings may create early visibility and encourage interest from analysts and institutional investors. However, they also bring the risk of premature scrutiny, especially if the offering or transaction timeline is delayed or withdrawn. For this reason, many companies prefer to wait until they have resolved at least one round of SEC comments—and have more certainty around deal timing—before going public with their registration statement.

Conclusion

Filing an initial draft prospectus confidentially allows a company to take a measured, strategic approach to the SEC review process. This is especially valuable in IPOs and de-SPAC transactions, where timing, perception, and regulatory outcomes can make or break a deal. Whether to preserve deal flexibility, manage unknown regulatory reactions, or optimize transaction timing, confidential submission is a tool that provides significant advantages—particularly when navigating complex or fast-moving capital markets.

An experienced securities lawyer needs to evaluate whether filing confidentially without certain financials is advisable. If a company opts to file without certain financials, e.g., audited interim financials, the SEC may simply reject the submission and advise the company to file once its audited financials have been fully completed.

This article is for informational purposes only and does not constitute legal advice. For tailored guidance on SEC filings or going public, please contact our securities law team.

Contact Person: Nick L.Torres, Esq. and Zhiqi Zheng, Esq.