An IPO is a major event in the development of a tech firm and is a source of value for its founders, employees, and customers. But it also creates an entire new set of rules, regulations, and standards that the company may not have adhered to as a private enterprise. The key to success is to be prepared in advance, which starts with a complete IPO preparation checklist.
The first step is to establish a fully functional system that allows the business to maintain an accurate financial record that can stand up to the scrutiny of shareholders and regulators. This is a top priority for the CFO team and must be addressed long before the IPO timetable. This involves implementing an automatic reconciliation process to remove errors in data, ensuring that the company is compliant with IFRS and US GAAP, and setting boards committees like the audit, compensation, and special finance.
Another crucial aspect is having a solid management team that will be in a position to implement the expansion plans of the company as it moves to becoming public. This is typically the most important factor, other than financial, to consider when preparing for an IPO. Investors are looking for a management team that has demonstrated their capability.
An experienced auditor or advisor is required to conduct an IPO readiness test to determine the current state of internal controls accounting procedures, internal control and other issues that need to be addressed before the IPO. It is best to perform this early in the IPO process to ensure that any issues can be remedied before being divulged to investors and SEC.