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Navigating the IPO process: What to expect during the first 90 days

11 January, 2018

Daniel Klausner
Capital Markets Advisory Leader, Deals, PwC US

As a company goes through the IPO process, it’s useful to have a guide that details out what senior executives should expect along each step of the way. PwC’s recently updated paper, Roadmap for an IPO: A guide to going public, aims to do just that. In the paper, we outline the first 90 days and beyond in order to help companies and senior executives feel more prepared about what’s coming and what’s expected.

After the readiness assessment and preparation stage is complete, a company moves into the IPO process execution stage. A company can generally expect a minimum of three to five months from the time it initially kicks off this process with an organizational meeting until the time it receives the dollar proceeds from the IPO. The actual length of this period depends on, among other things, the readiness of the company to go public, the development of the equity story, the availability of information that must be disclosed in the prospectus and market conditions.

Here are key steps along the way to becoming a public company:

Days 1-60

  • Hold the all-hands/Organizational meeting: Members of the deal team (senior executives, lawyers, accountants and investment banks) meet to discuss the structure of the offering, coordinate responsibilities for sections in the registration statement and establish a timetable for the process through to pricing the IPO.
  • Perform due diligence: Throughout the IPO process, the entire IPO team will perform due diligence on the company’s business, financial statements and projections. The goal of due diligence is to make sure that the registration statement contains no material misstatements or misleading information and that no material information has been omitted.

Days 61-90

  • Ensure financial statements haven’t “gone stale”: The financial information filed with the SEC must be updated continuously throughout the public filing process in order to comply with the SEC staleness rules on the specific filing date.
  • Decide if you want confidentiality: Historically, registration statements submitted to the SEC became immediately available to the public. However, companies are now permitted to submit their registration statements on a confidential basis.
  • File the registration statement: When the registration statement has been completed, the document is sent to the printer and is filed with the SEC by electronic transmission.
  • Await SEC review: The SEC has 30 days to perform their initial review and provide comments on the registration statement. The staff reviews the documents to determine whether there is full and fair disclosure, particularly to determine whether or not the document contains misstatements or omissions
of material facts.

Days 91 and onward

  • Respond to SEC comment letters: After review of the registration statement, the SEC staff typically issues a comment letter that sets forth questions they have. Each comment in the staff’s letter must be addressed and resolved in writing before the registration statement can become effective.
  • Prepare the amended registration statement: Any interim developments that materially impact a company and its prospects must be disclosed via amendments to the initial registration statement.
  • Launch the offering: Once the prospectus has been “cleared” by the SEC and the IPO market conditions are favorable, the company files a preliminary prospectus with the SEC that includes the dollar offering range per share.
  • Send out the preliminary prospectus: A preliminary prospectus may be sent to interested institutions or persons prior to the pricing of the offering.
  • Conduct the roadshow and build the book of demand: Investment banks arrange meetings for senior management to meet with potential institutional investors to learn about the company. This is a critical part of a company’s selling efforts, since it is here that a management team promotes interest in the offering with institutional investors. Investment banks will accept indications of interest for the shares from the institutions during the roadshow as the book of demand builds.
  • Negotiate and sign the underwriting agreement: By the time the registration statement has been filed, a company and its underwriter have generally agreed on the securities to be sold. However, the final price at which to offer the securities to the public, the exact amount of the underwriter’s discount and the net proceeds to the registrant have not yet been determined. The negotiation and final determination of these amounts depend on a number of factors, including the past and present performance of the company, current conditions in the securities markets and indications of interest received during the roadshow. At the end of the roadshow, investment banks price the IPO with trading to begin the following day.
  • Close the IPO: At closing, a company delivers the registered securities to the underwriter and receives payment for the issuance of securities.

To get more in-depth information about navigating the IPO process and to learn more about each step, check out the full paper. If you’re just getting started, see our resources around stage one – the readiness assessment.