The decision to go public
Companies need to objectively assess their readiness for life as a public company. Going public requires management to be prepared to meet shareholder and market expectations from day one. This includes addressing ongoing compliance and regulatory requirements, operational effectiveness, risk management, periodic reporting and investor relations.
Determining filer status
Filer status determines reporting requirements, during both the going public process and in life as a public company. Filer status should be assessed continuously throughout the going public process and at the end of the second quarter of the fiscal year for public companies.
Preparing to become a public company
Preparation is the secret to success. Planning, executing and managing an IPO is a complex task for any organization. The better prepared a company is, the more efficient and less costly the process can be. While the planning process for an IPO can start the day a company is incorporated or as late as months before a public offering, we recommend that an orderly plan be executed over a one to two-year period.
Common accounting and financial reporting issues
There are many accounting and financial reporting disclosure issues to address with an IPO, including matters related to financial statements, taxation, compensation and complex technical accounting areas. The key is to get in front of these issues well in advance of the registration process so that they won't be an impediment to becoming a public company.
Building a going public team
The decision to go public can be one of the most important in a company’s history—and one of the most challenging. A company needs expert direction and assistance to stage a successful IPO. Keeping in mind the impact that the SEC can have on the company’s registration process is important when choosing advisors who will assist in the IPO process.
Preparing the registration statement
Resist the temptation to allow the underwriters or attorneys to perform significant amounts of drafting, as this could result in a registration statement that deviates from management’s view. Management knows the business best, so it should take an active role providing direction in the drafting process.
Navigating the IPO process
The most successful IPOs are launched by those businesses that operate as though they were public companies well in advance of their actual IPO. These businesses have a relatively smooth process of going public and they quickly transition to life as public companies.
We are public! Now what?
The IPO is not the end of the story—it is only the beginning. Once listed, a company will be under far greater public scrutiny and will have a range of continuing obligations. The public’s perception of a company has a direct effect on the value of its stock. Do not underestimate it. Life as a public company also means getting comfortable with the rhythm of quarterly and annual reporting requirements, their content and costs.
