IPO Preparation Checklist
Many private companies view an initial public offering as a way to expand their business. But this process is complex and comes with a significant risk. It requires meticulous planning and strategic thinking to ensure long-term success.
The first step to prepare for an IPO is to create and present your equity story which explains to investors your path toward value creation and helps differentiate your company from competitors. This is essential for establishing an attractive valuation and attracting the attention of analysts, investment bankers and underwriters.
The next step is to evaluate the management team and leadership. You need to ensure that your management team is able of managing an IPO that is a risky undertaking. For example, an IPO could bring additional financial reporting requirements and tax implications, which may require adding a tax or finance specialist to the executive team. Additionally, you will need to decide if you wish to have dual-class stock which gives the founders as well as senior managers different voting rights.
A strong record of financial accountability is essential for an IPO. This includes a well-defined SOX programme, which should be put in place and revised prior to the IPO. It’s also important to check your current records system which includes minutes, capitalization files, material agreements and the old option grants. This is essential for meeting SEC requirements and bank underwriters. It’s important to find out if there are any potential “material weaknesses” in the company’s control systems to fix them prior to going public.