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

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

Too Good to Fail


by Best Lawyers

Sandro Abegglen discusses new regulations after financial crises, corruption, and more.

An Interview With Niederer Kraft Frey

Flawed Relocation Program Leads to Litigation


by Victoria Langley

Newark’s lawsuit against NYC could impact how cities across the country tackle homelessness.

Relocation Program for Homelessness

Fighting for the Underdog


by Sean Stonefield

A combination of hard work and excellence in the courtroom has garnered outsize results for the injured.

Block O'Toole & Murphy's Courtroom Success

Benedict Morelli: New York's Trial Attorney


by Best Lawyers

How Benedict Morelli successfully represented comedian Tracy Morgan and others.

Who Is Benedict Morelli

In the News: New York


by Best Lawyers

News and Events for New York Lawyers

In the News: New York

An Interview With Latham & Watkins


by Best Lawyers

Germany's 2020 “Law Firm of the Year” honoree in Banking and Finance Law

An Interview With Latham & Watkins

What New York's Child Victims Act Means for Public Schools


by Anastasia M. McCarthy

The new Child Victims Act is expected to have a profound and long-lasting impact on public school systems.

Understanding New York's Child Victims Act

Courtroom Mastery


by Justin Smulison

Thomas Moore's latest multimillion-dollar verdict secures justice for a near-fatally injured client.

Marion Hedges Injury Settlement

Trending Articles

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

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

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

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?

Choosing a Title Company: What a Seller Should Expect


by Roy D. Oppenheim

When it comes to choosing a title company, how much power exactly does a seller have?

Choosing the Title Company As Seller

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?

Announcing the 2022 Best Lawyers in Canada™


by Best Lawyers

The results include an elite field of top lawyers listed in the 16th Edition of The Best Lawyers in Canada™ and 1st Edition of Best Lawyers: Ones to Watch in Canada.

Announcing the 2022 Best Lawyers in Canada™

Caffeine Overload and DUI Tests


by Daniel Taylor

While it might come as a surprise, the over-consumption of caffeine could trigger a false positive on a breathalyzer test.

Can Caffeine Cause You to Fail DUI Test?

The Real Camille: An Interview with Johnny Depp’s Lawyer Camille Vasquez


by Rebecca Blackwell

Camille Vasquez, a young lawyer at Brown Rudnick, sat down with Best Lawyers CEO Phillip Greer to talk about her distinguished career, recently being named partner and what comes next for her.

Camille Vasquez in office

All Eyes to the Ones on the Rise


by Rebecca Blackwell

Our 2023 honorees recognized in Best Lawyers: Ones to Watch™ in America tell us more about how their path to law formed, what lead them to their practice areas and how they keep steadfast in their passion to serve others.

Person walking between glass walls towards window

Announcing the 2022 "Best Law Firms" Rankings


by Best Lawyers

The 2022 “Best Law Firms” publication includes all “Law Firm of the Year” recipients, national and metro Tier 1 ranked firms and editorial from thought leaders in the legal industry.

The 2022 Best Law Firms Awards

Wage and Overtime Laws for Truck Drivers


by Greg Mansell

For truck drivers nationwide, underpayment and overtime violations are just the beginning of a long list of problems. Below we explore the wages you are entitled to but may not be receiving.

Truck Driver Wage and Overtime Laws in the US

Announcing The Best Lawyers in Australia™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from Australia.

The Best Lawyers in Australia™ 2023

Announcing the 2022 Best Lawyers in South Africa™


by Best Lawyers

The results include an elite field of top lawyers and firms.

Announcing 2022 Best Lawyers in South Africa

Announcing the 2022 Best Lawyers™ in Australia


by Best Lawyers

The results include an elite field of top lawyers and firms.

Announcing the 2022 Best Lawyers™ in Australi