Insight

Establishing and Navigating the Moving Parts of an IPO

The first step for a company looking to go public is to assess its viability by establishing whether or not it has the critical mass required to be a publically traded entity.

IPO
GS

Gregory Sichenzia

November 22, 2016 12:00 AM

Taking a company public is a critical step in growing and expanding a company, as it indicates the financial strength and prestige to potential investors and consumers. However, the multitude of steps required to list a company on a public equity market can be challenging if a company isn't familiar with all of the moving parts. The key to success is getting started early (about 18 months out) and establishing the below core business processes and partners that help ensure compliance and minimize costs.

Focus on Financials and Technology

It's a big decision to take a company public, given the complexities and challenges involved. Once the decision is made, pre-IPO companies are required to demonstrate an upward trend in financial performance and a strong balance sheet. Therefore, the first step for a company looking to go public is to access its viability by establishing whether or not it has the mass required to be a publically traded entity.

To get started, companies should analyze their IPO readiness by comparing their financials with similar companies that have recently gone public, either in the same industry or market. This type of information is easily accessible due to the regulations in place that require public companies to file financial statements and balance sheets with the Securities and Exchange Commission (SEC), so a pre-IPO company's CFO and board members should use this data to determine whether they are "ready" to go public.

Once a company establishes that it's ready to list on an exchange, they next need to focus on installing the right technology to meet financial reporting requirements under the Sarbanes Oxley Act. Ultimately, an inadequate system could result in reporting errors down the line, which might be seen as a red flag for potential investors and regulators. To ensure the right system is in place, a pre-IPO company should align its financial and IT teams to determine what data is required for public filings and financial reports, as well as who will be responsible for managing the data going into those reports once the company goes public.

Building the Right Team


A company is only as strong as its leadership, thus assembling a strong team to guide the IPO process is essential in successfully taking a company public. When planning to go public, a pre-IPO company should line up the following key business partners:

Legal Counsel: Establishing a core legal team that has experience, knowledge and wide network of resources needed to structure and navigate the moving parts involved with an IPO is imperative. When choosing a law firm, it's important that the legal resource fits the condition and business goals of the pre-IPO company, as well as its budget. Additionally, a company's law firm does not just provide legal counsel during the IPO process - they also serve as savvy matchmakers who can connect a company with the right business partners in order to allow for a successful IPO. Hence, a company should find a law firm that has a broad network and is deeply connected to the other necessary players required in the IPO process. When taking a company public, who you know is very important, so selecting a law firm with deep connections will help position a company for IPO success.

Core Accounting Team: Mid-cap companies will need an SEC qualified accounting firm that is registered with the Public Company Accounting Oversight Board (PCAOB) that can adhere to the SEC established standards required to protect the interests of investors when preparing accurate and independently produced audit reports. A list of PCAOB registered firms can be found online, and companies can search based on name, city, state and category. It's important to find a "bankable" accountant or accounting firm; one that has a reputation that will help sell a company's IPO and attract investors. Companies who hire big-name accounting firms are able to leverage their association with a name brand firm, however these large firms tend to move slowly and are comparably more expensive.

Investment Banking: Next, pre-IPO companies should work with their legal team to find an investment banker to underwrite its IPO. Finding the right investment banker is crucial because they are responsible for structuring the entire IPO offering, submitting bids to companies on how much money they think the company will raise and helping to determine what type of securities will be issued on the IPO.

Investor Relations (IR) and Public Relations (PR): When a company goes public, it will have to manage two businesses - operating its company and managing the business of its public stock. Both businesses support each other and if either one of them languishes, the other business and the company's success as a whole could suffer. Thus hiring the right IR and PR firm is essential in generating awareness about the IPO in order to attract and engage potential investors, as well as strengthen the company's stock price. IR and PR firms can vary in size and expertise, so companies should do some research and select agencies that match their business objectives and goals.

Preparation and Planning Leads to Success


Taking a company public is a complicated process, with many moving parts. By rushing the process or putting together an inexperienced team, the likelihood of errors being made increases as does the potential for non-compliance with the SEC's regulations. Companies that focus on assembling the best possible financial and reporting systems, as well as experienced management teams, ahead of the IPO process will minimize costs and experience fewer distractions once the company goes public.

For more information, follow the source link below.

Related Articles

IN PARTNERSHIP

A Street Fight in the Bronx


by Adam Leitman Bailey

Adam Leitman Bailey’s firm helped settle a Bronx brawl over land between two parties and brought victory against a long-standing powerful family in New York.

Warehouse in New York at night

The Tragic Limitations of New York’s Outdated Wrongful Death Law


by David Scher

New York might be a progressive state in many respects, but its wrongful death law is itself a regressive tragedy—essentially the same statute first passed in the mid-1800s—that prolongs and deepens grieving families’ suffering. This must change.

Grieving person sitting on park bench in front of ocean and storm

IN PARTNERSHIP

Heroes Among Men: How Adam Leitman Bailey, P.C. Saved Lives of the Lifesaving


by Rebecca Blackwell

When a 911 Center in New York City was put in danger, Adam Leitman Bailey, P.C. went to work against the unlawful and hazardous actions of a developer whose construction threatened the peace and safety of all who worked for the Fortune 500 company.

Danger construction site no trespassing sign on fence

IN PARTNERSHIP

Adam Leitman Bailey Saves Upper East Cooperative From Forced NYU Combination With Neighboring University Building


by Rebecca Blackwell

When a New York resident of an iconic building was faced with a potentially devastating renovation to his beloved home, powerhouse real estate lawyer Adam Leitman Bailey tightened the knot on the loophole others said didn’t exist.

Large brownstone building with blue sky above in New York City

IN PARTNERSHIP

How To Run a Board Meeting


by Adam Leitman Bailey

Adam Leitman Bailey explains how using Robert's Rules of Order can assist with effective and productive board meetings in real estate matters.

Several people sitting in chairs around boardroom table

IN PARTNERSHIP

The Wolf Near Wall Street


by Rebecca Blackwell

When tensions among shared real estate owners reached their tipping point, Adam Leitman Bailey P.C. stepped in and solved a modern issue with an ancient remedy.

Mortgage documents on desk

IN PARTNERSHIP

What is The Grieving Families Act (2022)?


by Michael L. Taub

Best Lawyers honoree Michael Taub explains The Grieving Families Act and what it means for wrongful death and malpractice cases in New York.

Image of grieving person on blue background

IN PARTNERSHIP

Results That Make a Difference


by John Fields

Thomas Moore and Judith Livingston continue to secure some of the largest verdicts in New York state for their injured clients.

Male and female lawyer in blue suits

East Side Story


by Adam Leitman Bailey

The made-for-Hollywood tale of a 16-year legal tussle to help a dedicated band of Manhattan “homesteaders” take ownership of the buildings they had moved into and begun to rehab.

Rosario Dawson's Family Fight for NY Building

Results That Make a Difference


by John Fields

Thomas Moore and Judith Livingston continue to secure some of the largest verdicts in New York state for their injured clients.

Largest Injury Verdicts in New York State

Patrick A. Mullin, Esq. - Annual Report


by Patrick A. Mullin, Esq.

Veteran federal criminal defense attorney Patrick A. Mullin, Esq. provides an annual report of his victories in high-stakes criminal and tax matters.

Patrick A. Mullen Annual Report of Defense

A Reputation for Success


by Justin Smulison

Best Lawyers “Lawyer of the Year” David Perecman on his 40-plus years representing injury victims.

A 40 Year Career in Personal Injury

New York's Best Lawyers 2022


by Best Lawyers

Our 2022 New York's Best Lawyers publication features top-ranked legal talent and legal editorial from firms in New York, New Jersey and Connecticut.

New York's Best Lawyers 2022

A Potentially Precedent-Shifting Verdict


by Sean Stonefield

Preeminent trial lawyer Benedict Morelli on achieving one of the highest pain-and-suffering awards in New York State history.

Benedict Morelli

Overcoming Obstacles


by Sean Stonefield

Despite the COVID-19 pandemic, personal injury firm Block O’Toole & Murphy is on track for its most successful year.

Block O'Toole & Murphy

The 2021 Best Lawyers in New York Area


by Best Lawyers

Featuring the top legal talent in the New York area.

Best Lawyers New York 2021 Homepage Image

Trending Articles

A Celebration of Excellence: The Best Lawyers in Canada 2024 Awards


by Best Lawyers

As we embark on the 18th edition of The Best Lawyers in Canada™, we are excited to highlight excellence and top legal talent across the country.

Abstract image of red and white Canada flag in triangles

The Long, Short, Thick and Thin of It


by Avrohom Gefen

“Appearance discrimination” based on employees’ height and weight is the latest hot-button issue in employment law. Here’s a guide to avoid discrimination.

Woman stands in front of mirror holding suit jacket

Trailblazing Titans of the Industry: Announcing the 4th Edition Best Lawyers: Ones to Watch® in America


by Best Lawyers

Best Lawyers honor and celebrate these talented, innovative newer lawyers who are trailblazing their way to victories in courtrooms across the country.

Connected web above map of the U.S.

Announcing the 2023 The Best Lawyers in America Honorees


by Best Lawyers

Only the top 5.3% of all practicing lawyers in the U.S. were selected by their peers for inclusion in the 29th edition of The Best Lawyers in America®.

Gold strings and dots connecting to form US map

Pearls of Wisdom: Celebrating 30 Editions of Best Lawyers’ Rankings


by Best Lawyers

In celebration of our landmark 30th edition, Best Lawyers’ leadership explains how the world’s original and most trusted legal awards maintain their esteem, integrity and reputation for excellence among the top legal entities and their clients.

Best Lawyers logo for 30th edition release with gold glitter in background

Vanguards of Victory: Best Lawyers: Ones to Watch in Canada 2024


by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in Canada™ has been announced, and the lawyers showcased by these awards are rising to the challenge each day as advocates for clients all across the country.

Blue and black background with small squares connected by lines

Best Lawyers: Ones to Watch in America for 2023


by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in America™ highlights the legal talent of lawyers who have been in practice less than 10 years.

Three arrows made of lines and dots on blue background

Announcing the 2023 The Best Lawyers in Canada Honorees


by Best Lawyers

The Best Lawyers in Canada™ is entering its 17th edition for 2023. We highlight the elite lawyers awarded this year.

Red map of Canada with white lines and dots

IN PARTNERSHIP

Thomson Rogers: Toronto Personal Injury Lawyers


by Thomson Rogers

Since establishment in 1935, Toronto-based firm Thomson Rogers has consistently delivered results for their clients struggling through complex litigation.

Top of a Staircase Featuring Two Large Black Doors with Bookshelves and Chairs on Each Side

The Best Lawyers in South Africa™ 2023


by Best Lawyers

Best Lawyers proudly announces lawyers recognized in South Africa for 2023.

South African flag

IN PARTNERSHIP

How Long Does a Felony Stay On Your Record in California


by Peter Blair

A felony can remain on your record for life in California. Some felonies qualify for expungement. Learn how to remove a felony conviction from your record in California.

Hand setting bird free out of a guarded fence

What the Courts Say About Recording in the Classroom


by Christina Henagen Peer and Peter Zawadski

Students and parents are increasingly asking to use audio devices to record what's being said in the classroom. But is it legal? A recent ruling offer gives the answer to a question confusing parents and administrators alike.

Is It Legal for Students to Record Teachers?

Incendiary Behavior


by Lyssa A. Roberts and Rahul Ravipudi

California’s future will see more frequent wildfires caused by faulty equipment. Litigation tied to recent Golden State infernos shows the way forward.

Mountain range with glow of wildfires behind it

Announcing the 2022 Best Lawyers® in the United States


by Best Lawyers

The results include an elite field of top lawyers listed in the 28th Edition of The Best Lawyers in America® and in the 2nd Edition of Best Lawyers: Ones to Watch in America for 2022.

2022 Best Lawyers Listings for United States

The Upcycle Conundrum


by Karen Kreider Gaunt

Laudable or litigious? What you need to know about potential copyright and trademark infringement when repurposing products.

Repurposed Products and Copyright Infringemen

Famous Songs Unprotected by Copyright Could Mean Royalties for Some


by Michael B. Fein

A guide to navigating copyright claims on famous songs.

Can I Sing "Happy Birthday" in Public?