An IPO offers private companies powerful growth opportunities, but it also subjects them to regulations and rules they were not required to follow as a private company. Therefore, it’s important for companies to understand all of the potential risks and challenges prior to taking the step into the public markets.
Whether your company is considering an IPO or not, establishing an ideal-practice checklist should be the first step to ensure you’re prepared for the process. The checklist for preparation for an IPO should include everything from due diligence to stakeholder alignment, to gathering and analyzing financial data. A thorough checklist will help you to pinpoint and close gaps between where your company is today and where it needs to be prior to bells ringing for the IPO bell.
If you’re planning to go public, it’s best to consult an accountant to make sure that you are aware of the various types of equity compensation that can affect your tax bill and to plan according to the potential tax consequences. If you have made an 83b) election, you may be facing a significant increase in your taxable income if you go public. If you have incentive stock options (ISOs) it is important to consider the possibility of being be subject to alternative minimum tax.
A checklist for preparing an IPO must also provide information regarding the regulatory compliance requirements associated with an IPO and should include the Securities and Exchange Commission’s (SEC) registration and disclosure rules. Your ipo preparation checklist should also outline the necessary steps to prepare and file your Draft Registration Statement or S-1, which includes submitting both EDGAR and iXBRL instance files.