Benjamin Franklin is credited with the old adage «By not preparing, you prepare to fail.» When private companies begin their IPO process, it is an important time that requires a strategic plan and meticulous preparation to ensure success.
This lengthy and complicated procedure could be a nightmare for any team. The IPO process involves many partners, including investors, underwriters and investment banks. It is essential to present an enlightened and clear equity narrative that addresses expectations of the market and provides potential investors with the chance to align themselves with your company’s expansion plan.
One of the first steps in IPO preparation is to conduct an IPO readiness test, which examines the way a business will look like once it becomes publicly traded. This helps teams identify gaps that need to be addressed prior to the IPO timeframe. Many venture-backed businesses do not have financial reports that meet the standards of compliance with the public company. An IPO readiness assessment identifies this issue and can help legal and finance teams correct the situation well in advance of the IPO process getting underway.
Once the initial preparation is completed, it’s time to get ready for the ongoing reporting requirements of regulatory reporting. This involves gaining access to the Securities and Exchange Commission (SEC) EDGAR system. It’s also important to create an internal working group within the IPO team to collaborate with your law firm to draft EDGAR as well as iXBRL example documents. This should include a point person who is accountable for uploading exhibit files to the SEC and co-ordinating with your financial printer/SEC filer.