Many private companies consider an initial public offering (IPO) as a strategic option to grow their business. This process is complicated and carries significant risk. It requires strategic thinking and careful plan-of-action to ensure long-term success.
To prepare for an IPO, the first step is to create and communicate your equity narrative. This will tell investors how you plan to create value, and how your business is differentiating itself in the marketplace. This is essential for establishing an attractive valuation and attracting the attention of investment bankers, analysts and underwriters.
The next step is evaluating the leadership team and management. An IPO is a high-risk venture which is why you need to be sure the management team you choose to work with can handle it. For instance, an IPO could trigger additional financial reporting requirements as well as tax implications. This could require adding a finance or tax specialist to the executive https://designdataroom.com/venue-by-dfin-vdr-review/ team. You will also need to decide whether you want to use dual class stock, which gives the founders and other managers different voting rights.
Having a strong record of financial control and accountability is vital for an IPO. This means having a clearly defined SOX program, which must be in place and revised prior to the IPO. It is also necessary to review your existing system of records. This includes capitalizations files, minutes and material agreements as well as older option grants. This is important for meeting SEC and bank underwriter requirements. It’s important to find out whether there are any « material weaknesses » in the controls of your company so you can fix these prior to going public.