Many private companies think of an initial public offering (IPO) as a viable way to expand their business. This is a complex process and comes with significant risks. It requires a keen eye and strategic plan to ensure long-term success.
The first step in planning an IPO is to write and articulate your equity story that explains to investors the path you are taking towards value creation and differentiates your company from competitors. This is vital for establishing an attractive valuation and attracting the attention of analysts, investment bankers and underwriters.
Next, you need to examine your management team and leadership. An IPO is a high-risk venture, so you want to be sure your management team is able to handle it. An IPO, for example, can have additional tax implications and financial reporting requirements, which may require the addition of a finance or tax specialist to your executive team. You’ll also have to decide if you want to have dual class stock, which grants the founders and other managers different voting rights.
A track record of financial accountability is essential for an IPO. This means having a clearly defined SOX program, which must be in place and regularly updated before the IPO. It is also important to examine your current system of records. This includes minutes, capitalizations files and material agreements as well as historic option grants. This is essential for ensuring that https://designdataroom.com/ma-data-rooms-for-modern-deals-2022/ you meet SEC and bank underwriter requirements. You should determine whether the company has “material weaknesses” to address them prior to launching.
