Many private companies view an initial public offering as a way to grow their business. But this process is complex and is a risky one. It requires detailed planning and strategic planning to ensure long-term success.
The first step to prepare for an IPO is to write and present your equity story that communicates to investors the path you are taking towards value creation and distinguishes your company in the marketplace. This is essential for establishing an attractive valuation and getting the attention of investment bankers, underwriters, and analysts.
The next step is evaluating the leadership team and management. You want to make sure that your management team is able of handling an IPO as it is a risky venture. For example an IPO could result in additional financial reporting requirements and tax implications. This could require adding an accountant or tax expert to the executive team. You will also need to decide whether to have dual class stock, which grants founders and other senior managers differential voting rights.
A record of financial accountability is crucial for an IPO. This includes a well-defined SOX program, which must be in place and updated prior to IPO. It is also essential to examine your current system of records. This includes minutes, capitalizations files material agreements, as well as the old option grants. This is essential for meeting SEC requirements and bank underwriters. It’s crucial to determine if there are any potential „material weaknesses” in the company’s control systems to ensure that you have the controls in place prior to going public.