Benjamin Franklin is credited with the old adage “By not planning, you prepare to fail.” As private companies begin their IPO process, it is an important time that requires a meticulous and strategic preparation to be successful.
The management of this complicated and highly regulated process can be a challenge and time-consuming for any team. The IPO process involves multiple partners, including investment bankers, underwriters and investors. It is important to present an equity story that clearly is in line with market expectations and offers potential investors the possibility of aligning with the company’s growth plan.
An IPO readiness assessment is one of the first steps in preparing for an IPO. It considers what a company’s image will look like when it is listed. This can help teams determine any deficiencies that need to be addressed before the IPO date. Most venture-backed firms don’t have financial statements that meet the requirements of compliance for public companies. A IPO readiness assessment flags this issue and can help legal and finance teams to rectify the situation well in advance of the IPO process starting.
Once the initial preparation work is finished, it’s time to begin making preparations for the regular regulatory disclosure reporting. This involves gaining access to the Securities and Exchange Commission (SEC) EDGAR system. It is crucial to establish an effective team within the IPO to work with your law firm outside in the creation of iXBRL and EDGAR examples of documents. This should include someone who is responsible for uploading exhibits to the SEC and for working with the financial printer/SEC documents.