IPO Preparation Checklist
Many private firms consider an initial public offering (IPO) as a viable option for boosting their business. However, this is a complex process and is a risky one. It requires careful planning and strategic thinking to ensure long-term success.
To prepare for an IPO, the first step is to create and communicate your equity narrative. This will tell investors how you intend to create value, and how your company will stand out in the market. This is essential to establish an attractive valuation and attracting the attention of investment bankers, analysts and underwriters.
Next, you need review your leadership team and management. An IPO is a risky venture which is why you need to ensure that your management team is able to handle it. An IPO, for example, could come with tax implications and financial reporting requirements, that could require the addition of a finance or tax specialist to your executive team. You'll also need decide if you would like to have dual-class stock, that gives the founders and higher-ranking managers different voting rights.
A strong record of financial accountability is crucial for an IPO. This includes having a well-defined SOX program, which should be in place and up-to-date prior to the IPO. It is also important to review your existing system of records. This includes capitalizations, minutes and material agreements as well as historic option grants. This is essential for meeting SEC requirements and bank underwriters. You should determine whether your company has “material weaknesses” so that you can improve them prior to going public.
