Many private companies see an initial public offering as a means to grow their business. The process is not easy, carries significant risks and requires strategic thinking and careful planning to https://designdataroom.com/what-you-need-to-know-about-ipo-process/ ensure long-term business success.
The first step in preparing an IPO is to formulate and articulate your equity story that communicates to investors your path toward value creation and differentiates your company from the competition. This is crucial for establishing an attractive valuation and attracting the attention of analysts, investment bankers and underwriters.
The next step is to review the leadership team and management. You want to make sure that your management team is able of handling an IPO, which is a high risk venture. An IPO, for example, could have tax implications and financial reporting requirements, that could require the addition of a finance or tax expert to your executive team. It is also necessary to decide whether you want to have dual-class shares, which gives the founders and the senior managers different voting rights.
A track record of financial accountability is crucial for an IPO. This means having a clearly defined SOX program, which should be in place and up-to-date before the IPO. It’s also crucial to examine your current system of records including capitalization files, material agreements and historic options grants. This is essential to meet SEC requirements and bank underwriters. It’s important to find out whether there are any “material weaknesses” in the company’s control systems to ensure that you have the controls in place prior to going public.
