Pre-IPO Planning: Essential Guidelines & Tips for Success
Taking a company public is one of the most significant milestones in its growth journey – but in order to see success, it is essential to focus on strategic preparation across financial and operational departments.
By following a comprehensive pre-IPO plan, you can best avoid common pitfalls and set your business up for long-term success in the public landscape.
As experts in helping organizations pave the way to a successful IPO, we’ve outlined key guidelines and expert tips to help you streamline the IPO process – from initial planning to public offering.
Pre-IPO Planning Tips, Steps, and Guidelines
- Conduct an IPO readiness assessment
- Strengthen leadership and governance
- Prepare financials and reporting structures
- Ensure operational readiness
- Focus on regulatory compliance
- Build a strong investor relations strategy
1. Conduct an IPO readiness assessment
Before diving into the IPO process, it’s crucial to evaluate your company’s overall readiness by conducting an IPO readiness assessment. This involves conducting market and financial analyses alongside assessments of people, processes and systems to identify whether your business model is scalable, profitable, and sustainable in today’s markets.
To streamline success and efficiency, consider turning to a financial advisor that works to ensure your company’s valuation aligns with market expectations.
A thorough readiness assessment – especially when conducted alongside a trusted partner – will help you swiftly identify gaps and take corrective actions before going public.
2. Strengthen leadership and governance
A strong leadership foundation is crucial for attracting investor interest and ensuring a successful IPO, as your leadership team and board of directors will work to build investor confidence throughout the entire IPO process.
For best results, ensure that your CFO and other executives have public company experience, particularly around financial reporting and governance. If they do not, consider expanding your team’s abilities by hiring seasoned professionals who bring valuable expertise to guide your company forward.
Lastly, establish or refine previously existing governance policies and structures (for example, audit and compensation committees) to ensure they meet public company standards.
3. Prepare financials and reporting structures
Financial transparency is essential to building investor trust. To ensure your financials and reporting structures are properly prepared, you will need to:
- Compile at least 2 to 3 years of PCAOB-compliant financials and select external auditors to audit the prior year’s financials.
- Implement robust internal controls to meet Sarbanes-Oxley (SOX) compliance standards.
- Develop detailed financial models to showcase growth potential, earnings, and market positioning to potential investors. This financial planning and analysis team will work closely with the Investor Relations team – see No. 6.
With proper financial preparation, you’ll be well equipped to address any concerns that arise during the IPO process – and set clear expectations for investors in the process.
4. Ensure operational readiness
Going public brings many growth opportunities, often at a rapid pace. Operational readiness for FP&A becomes a significant challenge once a company goes public, particularly when it comes to precisely explaining variances across multiple versions of budgets and forecasts.
As such, it is essential to make sure your people, processes, and systems are prepared to scale and will be able handle the increased demands that come alongside an IPO.
To establish success, conduct IT, cybersecurity, and operational assessments to:
- Confirm that your technology systems can support greater reporting requirements and operational complexity and that all assets.
- Ensure that your accounting and FP&A teams have the bandwidth and proper experience for rigorous quarterly close and forecasting processes as well as preparing thorough monthly management reports and variance analysis.
- Safeguard your assets, intellectual property, and customer data with strong cybersecurity measures.
- Equip your employees with the knowledge and tools they need, from stock option plans to understanding post-IPO duties and restrictions.
For more information about IT security and cybersecurity risk assessments, head to our blog: New 2023 SEC Cybersecurity Ruling: Summary, Changes & Tips to Prepare.
5. Focus on regulatory compliance
As IPOs come with a significant increase in regulatory scrutiny, it is essential to get ahead of the compliance process. This will be essential for minimizing risks and avoiding costly delays down the line.
While the specific rules and regulations your organization must adhere to will vary depending on your company and industry, below are some common IPO regulatory compliance tasks.
IPO compliance at-a-glance:
- S-1 Filing: The S-1 registration statement filed with the SEC is one of the most critical documents in your IPO process. It provides a detailed overview of your company, including risks, financial health, and business model.
- Corporate Governance: This involves the establishment of public company standards, from committee structures to investor communications.
- Legal Readiness: This involves protections for intellectual property, solidifying legal agreements, and preparing for post-IPO obligations like stockholder equity distribution.
6. Build a strong investor relations strategy
Investor relations can make or break the success of an IPO, so it is essential to focus on how to engage and attract investors.
Focus on developing the story, messaging, and narrative for your company’s vision, including the value proposition and growth potential. For best results, emphasize financial strengths, market opportunities, and leadership’s ability to work effectively toward their goals.
Lastly, create a plan for communicating with investors after the IPO is achieved to streamline post-IPO planning and quarterly earnings report duties. This will be essential for keeping shareholders engaged, informed, and aligned.
Final Thoughts on Post-IPO Planning Guidelines & Tips
Navigating the complexities of pre-IPO planning is a critical step in positioning your company for long-term success in the public market – however, it can be challenging to maneuver all on your own.
Consultants like our team at Bridgepoint bring expert guidance, objectivity, and specialized knowledge to help companies manage every step of the IPO process, from financial readiness to regulatory compliance. Our proven industry experience ensures that companies are well equipped to avoid potential pitfalls and move forward into the public landscape with confidence.
Whether it’s preparing financials, strengthening leadership teams, or ensuring operational scalability, Bridgepoint Consulting provides the support and insights needed to successfully navigate the IPO process and beyond.
If your company is preparing for an IPO or seeking strategic financial guidance, we’re here to help. Contact us today to learn how we can support your pre-IPO planning and ongoing growth efforts.
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