IPO CHECKLIST

Deciding if going public is the right choice for you? Do you recall the feeling of having opened an old paper map
and trying to determine the most efficient route from point A to point B? The Initial Public Offering (IPO) process
can be a little convoluted at times, from investors, lawyers and auditors scrutinizing your business to ensuring
you have personnel for this exciting journey. It can feel a bit overwhelming. As such, we have compiled a simple
checklist of five milestones to guide you along the journey. While there are many steps along the way, these will
help to guide you down the right path of your IPO.

Note to the reader: this article focuses on the traditional IPO, but with the record number of SPACs, about 498 so
far this year already raising over $138B, many companies, including those backed by private equity groups, have
gone public via a SPAC instead of the traditional IPO. Despite SPACs coming under more scrutiny from the SEC this
year, access to a wider pool of capital, flexible deal terms and favorable pricing, reduced time to go public, and
an experienced sponsor and management teams make SPAC deals attractive. While there are additional steps to
consider during a SPAC, many of the same IPO concepts below apply.

DUE DILIGENCE FINANCIAL THE

CELEBRATE PARTNER UP & REGULATORY STATEMENTS ROADSHOW PRICING
FILINGS

0 CELEBRATE
As we noted above, the decision to go public is a big decision that will require time, money and
a loss of some flexibility. For example, IPO readiness will require your company to evaluate a
variety of compliance and regulatory requirements (e.g. Sarbanes-Oxley, PCI, legal), assess your
risk management, timely address issues of operational effectiveness, and prepare for periodic
reporting and investor relation meetings (e.g. 10-Q, 10-K). So, before you do anything else, pause for
a moment to celebrate with your team the exciting, but challenging journey upon which you are
about to embark.

1 PARTNER UP
12-24 MONTHS BEFORE IPO
It is critical to ensure the right internal and external teams are in place, including the right
management team and staff. After addressing your internal team, it’s time to partner up and get
your company in position for your public offering. Below is an overview of partners you’ll need.
and this begins with hiring an investment banking firm.
 Investment Firms: While you may have multiple investment firms, you need one primary
underwriter who will act as the “quarterback” for your IPO. Your underwriters will assist you in
selecting the right partner firms that “get” your business and align with your vision and mission
and understand your industry.

Law Firms, Tax Advisors & Investor Relations: You will also want to hire a reputable law firm.
Lawyers will play a key role in the IPO as the process involves complex federal and state regulatory
requirements. If the SEC, a state regulatory agency or an investor uncovers violations in your
filings, the company could face serious penalties. You will also want to bring in experienced tax
advisers and investor relations firms.

Audit Firm: You will need to hire an audit firm registered with the Public Company Accounting
Oversight Board (PCAOB). These auditors must also meet the rigorous independence standards set
by the SEC and PCAOB.

Strategic Partners: During this phase, it is often also helpful to bring in a strategic partner to help
manage the IPO readiness process, including assistance with developing mature accounting and
finance processes and assessing if you have the right IT systems in place to be a public company.

2 DUE DILIGENCE & REGULATORY FILINGS

6-12 MONTHS BEFORE IPO
Ensure you know your filing status. For example, do you qualify as an Emerging Growth Company
(EGC)? If so, the IPO process will be a bit more straightforward, and audit fees (both internal and
external) may be less expensive. The SEC notes that IPO issuers with less than $1.07 billion in
revenue in their most recent fiscal year end will qualify as an EGC, saving you time and money
around regulatory compliance (market cap size and other rules may apply). During this phase, you
will hold several due diligence meetings. Surrounding these meetings your company will be under
the microscope. Your customers will be contacted, additional market research will be performed,
and supporting legal, intellectual property, financial, and tax documentation will be reviewed.
Your company will be assessed for viability, stability, and reliability. Additionally, the underwriters
will aid you in multiple filings to be reviewed and approved by the SEC. These forms include, but
are not limited to: Engagement Letter, Letter of Intent, Underwriting Agreement, S-1 Registration
Statement, Red Herring Document, and S-4 form (if SPAC).

3 FINANCIAL STATEMENTS
1-6 MONTHS BEFORE IPO
Prior to your IPO, you will be required to present multiple years of PCAOB audited consolidated
financial statements in accordance with accounting standards such as the International Financial
Reporting Standards (IFRS) or United States Generally Accepted Accounting Principles (GAAP). In
order to align with the various requirements of the prospectus filing-process and routine financial
disclosures, you will likely have to adapt your financial reporting processes and IT systems,
including but not limited to the implementation of timely financial reporting and internal controls.
Your financial processes, cybersecurity safeguards, IT systems, and internal controls must provide
the needed transparency required of public companies. Additionally, as a part of this phase, you
will be required to become Sarbanes-Oxley (SOX) compliant. For more on SOX compliance click
here.

Ensuring that your company meets investor expectations in the early quarters after IPO is vital,
and this depends on the company’s ability to produce reliable numbers in a timely manner, which
should include certification from the CEO and CFO. Another common challenge prior to an IPO is
the “quarterization” of financial results, which can be time consuming and costly without good
monthly close process and financial statement analysis.
 4 THE ROADSHOW
1-6 MONTHS BEFORE IPO
The IPO “roadshow” consists of you and your underwriters meeting with various investors to
present your IPO. The goal is to see what kind of demand is out there, if any. In assessing the
demand, the underwriter can better estimate the number of shares to be included in the IPO. This
is the opportunity to show-off your company.

5 PRICING
1-6 MONTHS BEFORE IPO
Pricing is key to a successful IPO. Based on your roadshow, you will put together an “order book,”
which lists how many shares each potential investor would like to purchase and at what price.
Then, once the SEC approves your IPO (e.g. following the above filings), you will set your “effective
date.” Following this, the day prior to your effective date, you will determine your initial price per
share, as well as the number of shares that will be offered. As you determine your pricing, your
underwriters will help you consider in unison the current market, the results of your roadshow,
and the company’s goals. Note, IPO shares are often underpriced to ensure the shares are
purchased by the public investors, even if they do not receive the true value of its shares.

As you can see, the path to going public can be complex. It is important to be prepared, stay organized, and partner
with the right service providers. Bridgepoint Consulting can help your company benefit from mature processes
resulting in a successful IPO. If you have questions or are struggling to navigate the world of IPO, request a
consultation or learn more in our IPO Readiness datasheet.

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