Benjamin Franklin is credited with the old saying “By not being prepared for failure, you are preparing to fail.” When private companies begin their IPO process, it is an important time that requires a meticulous and strategic preparation to be successful.
Controlling this complex and controlled process can be time-consuming and overwhelming for any team. The IPO process involves many partners such as investors, underwriters and investment banks. It is essential to present an articulate equity narrative that addresses market expectations, and offers potential investors the chance to be aligned with your company’s trajectory of growth.
An IPO readiness assessment is one of the first steps needed to prepare for an IPO. It is a consideration of what a company will look like if it’s publicly listed. This can help teams identify any weaknesses that need to be addressed before the IPO timeframe. Many venture-backed companies do not have financial reports that comply with the requirements of compliance for public companies. A IPO readiness assessment identifies this issue and helps legal and finance teams correct the situation well in advance of the IPO process starting.
Once the initial work of preparation has been completed, it’s time to plan for ongoing regulatory reporting. This includes obtaining access to the Securities and Exchange Commission’s (SEC) EDGAR filing system. It’s also crucial to create an working group within your IPO team to collaborate with your legal firm to create EDGAR and the iXBRL instances documents. This should include a person who is responsible for uploading exhibits into the SEC and also working with the financial printer/SEC files.
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