Many private companies view an initial public offering as a way to increase their profits. The process is not easy, carries significant risks and requires strategic foresight and detailed plan-of-action to ensure long-term success.
The first step in planning an IPO is to formulate and present your equity story, which communicates to investors your plan for value creation and sets apart your company in the marketplace. This is crucial for establishing an attractive valuation and attracting the attention of investment bankers, analysts and underwriters.
The next step is to assess the management team and leadership. An IPO is a risky venture, so you want to ensure that your management team is capable of handling it. An IPO is one example. It may have tax implications and financial reporting requirements that could require the addition of a finance or tax specialist to your executive team. Additionally, you will need to decide whether to have dual class stock, which gives founders and other senior managers the right to vote in a different manner.
Having a strong record of financial accountability and control is crucial for an IPO. This includes a clearly defined SOX programme, which should be implemented and updated prior to the IPO. It is also essential to review your current system of records such as minutes, material agreements, capitalization files and historic options grants. This is important for meeting SEC and https://designdataroom.com/what-you-need-to-know-about-ipo-process/ bank underwriter requirements. It is important to determine if the company has any “material weaknesses” so that you can fix them before going public.