IPO Preparation Checklist

Many private companies see an initial public offering as a means to expand their business. This process is complex and comes with significant risks. It requires a strategic approach and meticulous plan to ensure long-term success.

The first step to prepare for an IPO is to develop and communicate your equity story which explains to investors your path toward value creation and sets apart your company from competitors. This is vital for establishing an attractive valuation and attracting the interest of analysts, investment bankers and underwriters.

The next step is to assess the leadership team and management. You must ensure that your management team is able of handling an IPO as it is a see this page risky undertaking. An IPO for instance, may have tax implications and financial reporting requirements which may require the hiring of a finance or tax specialist to your executive team. You will also need to decide if you want to have dual class stock, which grants founders and other senior managers differential voting rights.

A strong track record of financial accountability is crucial for an IPO. This means having a clearly defined SOX program, which should be in place and revised before the IPO. It is also important to review your existing system of records. This includes capitalizations files, minutes material agreements, as well as older option grants. This is important for meeting SEC and bank underwriter requirements. You should determine whether the company has “material weaknesses” to address them prior to launching.