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The old adage believed to be the work of Benjamin Franklin states, «By failing to prepare you’re in danger of failing.» As many private companies begin the IPO process, it is a critical moment that requires meticulous preparation and strategic planning for success.
This complex and regulated procedure could be a nightmare for any team. The IPO process involves a variety of partners which include investors, underwriters and investment banks. It is crucial to present an articulate and clear equity story that is in line with market expectations and provides potential investors with an opportunity to align themselves with your business’s expansion plan.
An IPO readiness assessment is among the initial steps to prepare for an IPO. It considers what a company will look like if it’s publicly listed. This can help teams determine any gaps that must be addressed prior to the IPO date. For example, most venture-backed companies do not have financial statements that meet the requirements for compliance with public companies. An IPO readiness assessment flags this issue and helps legal and finance teams to rectify the situation in advance of the IPO process kicking off.
After the initial preparation work is finished then it’s time to begin making preparations for the regular regulatory disclosure reporting. This includes gaining access to the Securities and Exchange Commission (SEC) EDGAR system. It’s essential to establish a team within the IPO to collaborate with your law firm outside on drafting EDGAR and iXBRL examples of documents. This should include a designated person who will be responsible for uploading exhibit files to the SEC and cooperating with your financial printer/SEC filer.