Public Company Compliance Readiness
So, You’re Going Public—What’s Next?
IPO regulations reshape your operational landscape, and viewing an IPO as a mere procedural checklist may overlook critical structural changes essential for post-IPO success. Beyond filing paperwork in the right order, strategic decisions about organizational and leadership structures, impactful operating processes, finance and accounting procedures, and technology frameworks are crucial at this juncture.
Going public introduces a new set of stakeholders—public investors and supporting regulatory authorities—demanding increased transparency into your business’s inner workings, including segments, products, strategies, and locations.
Key considerations
- What IPO regulations will impact your business?
- Are you prepared for these regulations?
- What proactive steps can you take now?
- How will segment reporting influence your operations?
Structural Considerations Pre-IPO:
The comfortable dynamics of pre-IPO growth need reevaluation as regulators define operating segments. These segments, profit centers with distinct financial data, require alignment with leadership structures and chief decision-makers’ analytical processes. Consider how segment reporting will align with your future vision, prompting necessary changes to reporting packages and organizational structures.
Key considerations
- How is your current business and operating model structured?
- Have you critically assessed your operating model for the future?
- What segments do you plan to report on?
New Expectations for Financial Close and Reporting
As a public company, detailed reporting becomes paramount. Prepare for reporting segments, revenue by product, non-GAAP measures, pro-forma financial information, and estimates requiring high judgment. Meeting the 45-day quarter-end reporting deadline necessitates efficient and precise financial close processes, requiring potential investments in finance/accounting processes and supporting technology.
Key questions to ask
- What products do you plan to report on?
- What non-reported items will be required in the future?
- Are your processes and systems equipped for these reporting requirements?
- How can you achieve a 45-day quarter-end close?
Preparing Your People, Process, and Technology for an IPO:
The way you report and how you structure your operating model will have significant impacts on your people, processes, and technology.
The interplay between reporting, operating models, and their impact on people, processes, and technology is critical. Leaders must be accountable, and systems must capture necessary metrics. Assess the information produced by the entity to establish proper management review controls.
Key questions to ask
- Is your leadership team structured in a way that reflects how you want the business to be managed? Is there accountability at the top for results?
- Have you thought through the close cycle and the reporting packages you need to have in place?
- Are your systems set up to provide financial information in the way your organization is reporting?
Other Considerations for Going Public
Every company faces unique challenges when going public. Some representative actions include:
- Engage a trusted partner for the labor-intensive S-1 process.
- Select underwriters and hire external legal securities counsel, a printer, and a transfer agent during the S-1 process.
- Train management for external communications and establish consistent messaging.
- Prepare for public company audits and consider quarterly reporting for Early Growth Companies (EGCs).
- Ensure a well-structured accounts payable process and transition to stock compensation software.
- Address Sarbanes-Oxley requirements and consider implementing lease accounting software for companies with numerous leases.
- Decide on the one-time election to delay accounting guidance implementation for EGCs.
Partnering for Success
An IPO is a fundamental change, and planning for its implications on people, systems, and technology is crucial. Our end-to-end expertise can guide you through the entire IPO process, from preparing financial disclosures to establishing a robust public company control environment and organizing your operations for the challenges ahead.
Connect With Our Leaders
April Coleman
Partner
(603) 686-2020
acoleman@cfgi.com
Chris Brandes
Partner
(201) 694-1561
cbrandes@cfgi.com
