Your essential early-stage IPO checklist

Now that you’ve decided to go public, what are your next steps? This IPO checklist can help keep you on track.

Now that you’ve made the choice to pursue an IPO, you still have a lot to consider. Deciding whether to go the traditional IPO route or use a special purpose acquisition company (SPAC) transaction, identifying what preparations are needed, determining the best way to communicate the changes – so much internal work needs to be done, especially in the early stages. Our IPO checklist will show you the steps you should take as you move forward in the process.

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Operational challenges

Assess your team’s skills and experience. In this job market, you might consider augmenting your team from the outside with a third party or consultant. You’ll want team members to have knowledge of:

Securities and Exchange Commission (SEC) reporting requirements of public companies
U.S. generally accepted accounting principles (GAAP) applicable to public companies (For companies currently considering going public, adoption of standards on leases and current expected credit losses might need to be accelerated.)
Income taxes
Valuations

Measure your IT system capability and alignment against public company requirements. Implementing a new system is a significant investment of both time and money – but the sooner you start the better. Consider your:

Enterprise resource planning (ERP) systems and upgrading them with the right financial reporting and accounting software in mind
Level of security and access controls
Reporting capabilities to capture disclosure requirements
Data integrity

Align your governance and internal controls to industry and stock exchange requirements, and document your processes and controls. While it can be difficult to ramp up policies and procedures as a small company, it’s vital to do so while you’re getting ready to go public (not after) in order to avoid heightened scrutiny and potential additional material weaknesses. Consider your:

Delegation of authority
Segregation of duties
IT security
Sufficiency of internal control processes and documentation
Industry and regulatory compliance requirements (SOX 302, 404, and 906)

Accounting and financial reporting considerations

Reassess materiality, and plan for any changes. When you go public, the users of your financial statements change, and the SEC has additional guidance on evaluating misstatements, which means some items previously deemed not material might need to be reconsidered.

Review public company adoption dates for new standards, and determine a plan to meet those dates.

Identify any Private Company Council (PCC) alternatives and re-record under GAAP applicable to public companies.

Determine if your financial reporting conforms to SEC requirements, including:

Having an audit performed by a firm registered with the Public Company Accounting Oversight Board (PCAOB).
The initial registration statement of a domestic emerging growth company (EGC) must include a minimum of two years of financial statements audited under PCAOB standards.
Domestic companies that are not either an EGC or a smaller reporting company must include three years of financial statements audited under PCAOB standards.
Financial statements for interim periods might also be required, depending on the timing of the registration statement.
Pro forma financial information for significant acquisitions must be included.

It’s easy to get overwhelmed in the early stages of an IPO, but following this IPO checklist can help you set your business up for success.

Getting ready for an IPO doesn’t have to be complicated.

Our team can help create a custom plan for your business.

IPO readiness services

Our team can help

Looking for help working through your IPO process? Our dedicated IPO team uses an IPO readiness assessment customized to your business, which considers where you are in the IPO life cycle, your financial maturity, and what you need to move forward. Contact our team today to get started.