The process begins well before the actual "Going Public" event. This phase is referred to
First, there needs to be a round of education for the board and
management team to fully understand the pros and cons to an IPO. While an IPO is a strong
means to strengthen a company's capital structure, it also has governance consequences as well
as increased regulatory costs. Decision makers need to be well advised of all significant
Once interest is confirmed by the board and executive management, a
strong market friendly story must be crafted. The story needs to makes sense both to early private
investors and the wide sea of potential public investors. We refer to this as the "value proposition to
Initial planning and preparation is the next step concluding with a
"readiness assessment." This step can have several iterations depending on the current state of
the private company. It involves identifying needs and building out a complete team of both internal
and external resources to be successful. Many aspects of the company need to be assessed,
such as the make-up and independence of board directors and identifying information necessary
for the initial filing with the SEC.
The private company needs to design and test disclosure
controls and internal controls over financial reporting (ICFR) as defined by the SEC. It is important
for these controls to be operating effectively to help ensure that all applicable rules and regulations
of the SEC are followed.
The second phase is execution of the registration process with
the SEC concluding with a declaration that a registration process is effective by SEC staff. This is
oftentimes a relatively short, but yet intense time period to prepare the initial registration statement,
respond to SEC comments, and resolve all concerns of the SEC allowing them to declare the
registration effective. An important part of this registration statement is the "prospectus" that will be
used by the company to solicit investors.
The third and final general phase addresses post-
filing activities, such as drafting and filing early periodic reports (i.e., Form 10-Qs and 10-Ks), fine-
tuning disclosure controls and ICFR, and building internal resources to carry "being public" duties
for the long-haul.