IPO Readiness Overview: Preparing Your Company for a Successful Transaction
- Published
- Mar 20, 2025
- By
- John Pennett
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Taking a company public is a major milestone that requires careful planning and preparation. The process typically takes 12-24 months and involves strategic planning, financial reporting, and establishing strong internal controls. John emphasizes the importance of having a detailed project plan, assigning clear task ownership, conducting audits, and preparing financial statements. Keeping leadership and the team well-informed and fostering collaboration are essential. Best practices include maintaining accurate records, implementing strong controls, engaging auditors early, and managing the project plan effectively. Audits, IPO preparation, and governance are closely linked, with thorough planning serving as the foundation for a successful IPO and long-term growth.
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Transcript
John Pennett:
The decision to become a public company is one that is not taken lightly. It takes a long time to get yourself organized and to go through the entirety of the process. Start off with an organizational meeting where everyone on the team gets together. Talk about the timelines, deliverables, and expectations. One of the key items in that is to obviously get the audits done. That process may take two to three months, depending on your preparedness. Once you file your initial documents with the SEC, they have a 30-day review period. By the time you get through the audits, get through the SEC review, and go back and forth on a couple of comments, you're looking at a timeframe of about four to six months from start to finish. During the audit preparation process, one of the key things is to figure out how audit ready you truly are.
So if a company has not gone through an audit in the past, you have to go back to the beginning of history for many key items, such as the equity transactions, fixed assets, and other accounts that build up historically. In the case of companies that have not gone through an audit before, oftentimes they're also not following GAAP accounting or have all the items required to complete an SEC-ready financial statement. As part of the SEC filings, both the CEO and the CFO are required to sign certifications as to the accuracy and completeness of the information included in the filing. Also included in the SEC filing is a discussion of the design and effectiveness of internal controls. Oftentimes, for companies that are going public for the first time, they will find that their are not designed effectively or operating effectively, or perhaps not documented sufficiently. So, putting those controls together to think about the size of the organization, how you can effectively design those controls to make sure that the financial statements are reporting accurate information on a timely basis is critical.
In order to have an effective audit, you should start the process early. Start the process with a triage, so understand where you are and the items that you're going to need to do in order to get through the audit process quickly. There are many elements of the audit, documentation of internal controls, third-party valuations, confirmations of stock, and other key transactions. So the quicker you can get those items organized, have all the documentation readily available, and be able to provide those to the auditors in a nice tight package that allows for them to do their work efficiently, the more smooth the audit will go and the quicker the process will come to fruition.
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John Pennett
John Pennett is the Partner-in-Charge of the National Technology and Life Sciences Group and works closely with our IPO clients and their circle of legal and underwriting advisors to take an IPO from concept to close.
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