IPO Case Study: Financial Records & Regulatory Compliance

Published: Mar 20, 2025
By: Mark Pelouze
Topics: IPO
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In this case study video, we dive into the challenges a pre-revenue biotech company faced in its early stages of going public—and how professionals at EisnerAmper helped turn things around. From lacking formal financial policies to underestimating the need for Securities and Exchange Commission (“SEC”) reporting expertise, missteps led to delays. But by bringing in the right professional services and addressing regulatory hurdles, the company successfully prepared IPO-ready financials. Key takeaways? Be realistic about internal resources, engage experienced professionals early, and set a clear timeline to stay on track. Learn more from our professional Mark Pelouze in this video!

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Transcript

Mark Pelouze:
This company was a pre-revenue biotechnology company that had been formed in 2020. They had raised about $20 million previously to advance their research and development, and they were looking to raise additional money to further their product candidates. The company's primary missteps were related to the timing of them kind of realizing that they needed help. They started the process with this small CPA firm, trying to assist in putting together gap compliant financial statements and footnotes. We identified pretty early on that there were some weaknesses around the financial reporting function. The local CPA firm wasn't really experienced enough to handle some of the accounting issues and the financial reporting issues.

The second thing that we identified was, they really didn't do a good job of keeping everyone on the same page. It's usually helpful in these situations to have a meeting upfront to establish a timeline, deliverables, who's responsible for what, and what the expectations are. And even to have weekly meetings to update everyone. The company's financial statements had historically been kept on the cash basis of accounting and needed to be converted to the accrual basis. So there was a gap there that needed to be filled in. Fortunately, they did ultimately retain professionals to assist in that process. What the company could have done better would be to do an honest assessment of what resources they had internally. It's a very involved process, and you need to have people that have the bandwidth to help and assist in the project.

Secondly, be proactive in identifying the gaps and identifying firms that could help fill in the gaps and assist in the process. And then lastly, having a timetable with all parties involved so everybody is on the same page at the start of the project. As far as who's responsible for what, what the deliverables are, the timing of those deliverables, the timetable to file and follow up after the filing as well, and keep those meetings going throughout the process so everybody remains on schedule.