Many private companies view an initial public offering as a means to increase their profits. The process is not easy, carries significant risks and requires strategic foresight and detailed planning to ensure long-term business success.
The first step in planning an IPO is to create and present your equity story that communicates to investors your path toward value creation and distinguishes your business from other companies. This is crucial to establish a compelling valuation and getting the attention of investors, underwriters, and analysts.
The next step is to evaluate your leadership team and management. An IPO is a high-risk venture, so you want to be sure your management team can handle it. For instance, an IPO could result in additional financial reporting requirements as well as tax implications, which might require the addition of an accountant or tax expert to the executive team. You will also need to decide whether to have dual class stock, which grants the founders and other top managers the right to vote in a different manner.
Having a strong record of financial accountability and control is essential for an IPO. This means having a clearly defined SOX program, which must be in place and pop over to this web-site regularly updated before the IPO. It is also crucial to review your current system of records. This includes capitalizations files, minutes and material agreements as well as the old option grants. This is essential for ensuring that you meet SEC and bank underwriter requirements. It’s important to find out whether there are any “material weaknesses” in the company’s control systems so that you can correct them prior to going public.