There are few things more anticipated in the stock market than an initial public offering, or IPO.
There are a few exchanges in the US on which stocks are traded, and thus on which IPOs can take place.
The New York Stock Exchange is the largest and oldest of these exchanges, starting in 1792, and it sits in its iconic home on Wall Street.
In 2016, Business Insider got a backstage look at one of the IPO days through the eyes of Carolyn Saacke, the chief operating officer for NYSE's capital markets business. The capital markets business oversees all IPOs and maintains relationships with the firms that are already listed on the NYSE.
The NYSE is housed in this historic building on the corner of Wall Street and Broad Street. Since the attacks on September 11, 2001, the street has been closed to traffic for security reasons. Additionally, all traders and guests for the IPO must now go through security checks.
e.l.f. had the entire exchange to itself that day, but it is possible for multiple companies to have IPOs in the same morning. We were told those are some of the busiest days.
By 8:30 a.m., she's already in a meeting with NYSE Group President Tom Farley and other top NYSE executives. They plan the strategy for the day, discussing everything from the marketing promotions for e.l.f. and NYSE to the long-term strategy for attracting new listings.
Every IPO is a big deal for the company, a culmination of years of hard work. To celebrate, the firm enjoys a breakfast in the private ballroom a few floors above the NYSE trading floor. e.l.f. has about 180 employees, beauty bloggers, and family members on hand for the event.
Carolyn milled around the breakfast, talking to executives and employees of e.l.f. as well as representatives of the underwriters.
Underwriters help to find buyers of the stock offering and bring the IPO to market. In e.l.f.'s case, about 8.3 million shares were offered for an estimated $141.7 million, and a syndicate of banks were involved.
Within the syndicate are lead underwriters who take charge of the IPO (and net the most fees). In e.l.f.'s case, this was JPMorgan and Morgan Stanley.
Each member of the e.l.f. delegation was presented with a commemorative medallion certifying the day of the IPO and the company's debut as a public firm. None of the ceremonial material, including a large stock certificate of the IPO, is dated until the day of the IPO.
"We're very superstitious around here," Carolyn said. "We don't date anything until the company actually lists."
The bell that opens the trading day at 9:30 actually uses a button to ring the bell, but this gavel will be used a little later in the morning.
Carolyn helps court firms to have their IPOs on the NYSE instead of on a competitor. She talks to them about choosing the lawyers or bankers for the IPO, and even the marketing strategy around the event.
By the time e.l.f. made it to the NYSE, Carolyn said she had been working with the executives for more than seven months.
During the pre-IPO ceremony NYSE executives help reassure the e.l.f. executives that everything will run smoothly. Carolyn said she has "a lot of faith" in the various teams.
It's the little things that make an IPO at the NYSE special, Carolyn said. For instance, every guest of e.l.f is given a large metal nameplate to wear throughout the day.
"Some people come back for other IPOs and they bring their old badge as a kind of collector's item," she said. "It's very cool to see."
Also on display was a bit of e.l.f flair. Men were wearing lapel pins, and some even had the e.l.f. logo stitched into their lapels. Carolyn noted that most companies use it as a celebration of their success, but for retail- and consumer-focused companies, it is a huge branding opportunity.
There is a ceremonial opening of the stock exchange: The bell must be rung for 10 seconds to mark the opening of the trading day and 15 seconds at the end of the trading day. If the ringing does not last 10 seconds, the traders on the floor will boo the executive. A few traders told us that P. Diddy was booed after the hip-hop star and business mogul didn't ring the closing bell long enough.
e.l.f. went on a long roadshow with its underwriting bank talking to potential investors to gauge demand for the IPO. With the information they gleaned, the company and underwriter set a price range a couple of weeks before the stock was set to open.
There are always things that could go wrong, including outside events, like a sudden collapse in markets or a terrorist attack, or internal computer problems. This uncertainty leading up to the IPO can make it nerve-racking, but Saacke said the NYSE tries to be as prepared as possible.