Many private companies consider an initial public offering (IPO) as a strategic way to expand their business. This process is complex and carries significant risk. It requires a keen eye and strategic plan-of-action to ensure long-term success.
The first step in planning an IPO is to write and communicate your equity story which explains to investors your plan for value creation and distinguishes your business from other companies. This is crucial for establishing an attractive valuation and attracting the attention of investment bankers, analysts and underwriters.
The next step is to evaluate the leadership team and management. An IPO is a high-risk venture therefore you need to be sure the management team you choose to work with can handle it. An IPO is one example. It could come with tax implications and financial reporting requirements that could require the addition of a finance or tax expert to your executive team. Additionally, you will need decide if you would like to have dual class stock, which gives founders and other executives different voting rights.
Having a strong record of financial accountability and control is essential for an IPO. This includes a well-defined SOX program, which must be implemented and revised prior to the IPO. It is also crucial to examine your current system of records. This includes capitalizations files, minutes material agreements, older option grants. This is essential to meet SEC requirements and bank underwriters. It’s crucial to determine if there are any potential “material weaknesses” in the company’s control systems so that you can correct them prior to going public.
https://designdataroom.com/what-you-need-to-know-about-ipo-process/