Top five IPO readiness tips

Success depends on identi­fying issues and monitoring progress through effective project management. Without this, one part of the organization might not know what another is doing. Successful IPOs use appropriate resources to support the IPO leader to build the plan, monitor progress, identify issues and keep the process on track. IPO process often leads to increased work­load. External resources may be considered to carry out day-to-day tasks or to perform specialized functions.

A robust IPO readiness assessment is the first step in a successful IPO. It is vital to identify big-picture issues and prevent surprises later. The assessment, in the form of a questionnaire, will help to identify key issues and gaps to be remediated. At the end of the readiness assessment, a company will have a clear roadmap of how to get there, with recommendations and workstreams prioritized, responsibilities assigned and a timetable for remediation. The readiness assessment therefore becomes a starting point for the company’s transformation.

Getting the right finance organization, with the right capabilities to deliver quality financial reporting at the right time, is an important factor in creating a successful IPO. We recommend a company to start acting like a public company at least one year in advance before filing its registration statement, focusing on reducing monthly financial closing process to a reasonable period and preparing quarterly financial information with a level of detail and accuracy of a would-be public company. It is also critical to develop a strong Financial Planning and Analysis function to accurately forecast earnings, track against guidance and deliver detailed projections needed for IPO valuation exercise. The first few quarters of life as a public company are critical. Inabil­ity to submit the required financial reports to regulators will be damaging to shareholder value and can compromise credibility. It is therefore important to build a strong finance organization with a repeatable process before getting in the spotlight.

After the IPO kick-off meeting, the organization and all its advisors have their hands full with the offering document, meetings with bank­ers, the registration statement process, inves­tor slides and roadshow materials. Companies tend to place less focus on building a sustain­able process (e.g. investor relations, corpo­rate governance, audit committees, internal control, legal and tax). Once listed, a compa­ny will need to address ongoing compliance and regulatory requirements and will require staging in a carefully controlled manner to ensure each element is ready.