How to prepare for an IPO like a PRO
The heightened uncertainty around IPOs makes it a sensitive time for everyone looking forward to a company’s listing on the stock market. During the IPO, all eyes are on the company, which makes way for a stressful IPO season for the company stakeholders.
Going public for the first time is truly an achievement, but it can also prove highly daunting. The markets can be brutal, but we have prepared an IPO checklist to help ease your burdens if you consider accessing public markets via an IPO.
1. Dream Team
One of the first things you can do as soon as you start preparing for an IPO is to put together a dream team of auditors, investment bankers, lawyers, underwriters, and technological support and chalk out their roles and responsibilities. The list of duties includes registration statement, offering, company overview, due diligence, and company framework.
2. Preparing initial documents
It is also time for you to start working on your company prospectus, an essential document submitted to the regulatory body at the time of registration. The prospectus must include an overview of the company and industry, competitive strengths, business strategies, offering summary, and financial data.
A financial printer assists all privately held companies with their registration procedure, including help with the documents required for filing with the regulatory body.
3. Choosing a stock exchange
Picking a stock exchange comes next, but it is not as simple as it sounds. One must consider the listing requirements, listing fees, and which stock exchange has the scope to give the notoriety and publicity it needs. After the selection of the stock exchange, apply for the listing.
4. Central Index Key and CIK confirmation code
CIK is a unique number assigned to every entity that submits filings to the SEC, and it helps differentiate between two entities with the same name. The CIK confirmation code is a code with eight characters used along with CIK to submit a filing via EDGAR.
5. Corporate Governance
Create a solid corporate governance framework appropriate for a company gearing up to go public. Introduce corporate governance policies while carefully considering the formation of a Disclosure committee on the board of directors.
Recruit a compensation consultant to review staff and board members’ compensation practices and policies. Also, hire for critical roles such as financial reporting, investor relations, and corporate governance to ensure the smooth functioning of the public company.
6. Risk Management Framework
The auditor must review the risk register with the company’s executive management team, another external auditor, and the board. Protection of the business and client data from the evils of digital transformation also has to be of utmost importance. Instructing IT teams to strengthen cyber security defenses is also essential. This will help you start operating as a public company and prepare for the days ahead.
7. Financial Reporting
An external auditor will be required to audit the financial statements of the past years. They will also need to work on sensitive accounting policies.
8. Corporate Goals
Work with a team to build corporate goals and means to measure business. Investment bankers, company leaders, or stakeholders can work together to create these metrics. Ensure that the ESG practices are incorporated into the company goals to give your company a better outlook during the IPO season.
9. Internal controls and compliance program
Discuss the potential weaknesses or weak points and their implications with advisors and underwriters. To ensure compliance, engage your external accounting firm in developing a SOX (Sarbanes-Oxley (SOX)) Program and a D&O broker to ensure that all your directors and officers are protected by D&O insurance ahead of the IPO.
10. Public Communications
Standardize all communications during the IPO and maintain consistency. Pre-set guidelines should govern all press releases, media interviews, and public appearances. Your website needs to be updated to display communication in tandem with the SEC’s rules on public communication.
Any litigation, pending, ongoing, or threatened, should be reviewed before the IPO to ensure that it doesn’t affect the IPO or spread malicious information about the company. The reputation of the company and its past performance are some of the critical factors that drive an investor’s decision-making process. This checklist will help you better equip yourself as a company on the verge of going public.