Many private companies see an initial public offering as a means to expand their business. But the process isn’t easy and comes with a significant risk. It requires careful planning and strategic planning to ensure long-term success.
The first step in preparing an IPO is to formulate and communicate your equity story which explains to investors your plan for value creation and helps differentiate your company in the marketplace. This is essential for establishing an attractive valuation and attracting the interest of analysts, investment bankers and underwriters.
The next step is to review the management team and leadership. An IPO is a risky venture which is why you need to ensure that your management team can handle it. An IPO is one example. It can have additional tax implications and financial reporting requirements, which may require the addition of a finance or a tax expert to your executive team. You’ll also have to decide whether you want to use dual class stock, which grants the founders and other managers distinct voting rights.
A solid track record of financial accountability is essential for an IPO. This includes having a well-defined SOX program, which must be in place and revised prior to the IPO. It’s designdataroom.com also crucial to examine your current system of records, including minutes, material agreements, capitalization files and historical options grants. This is vital to meet SEC and bank underwriter requirements. It’s crucial to determine if there are any potential “material weaknesses” in the company’s controls to ensure that you have the controls in place prior to going public.