IPO Readiness Advisory

Service description

IPO readiness advisory helps a private company prepare to sell shares to the public. An advisor assesses its financial reporting, internal controls and governance against public-company requirements, then plans the work needed to file a registration statement. The work is meant to start well before the offering.

Common industries

Applies to growth-stage and mature private companies in any industry considering a public offering.

ROI

Early readiness avoids the scramble and findings that delay or derail an IPO; episodic but high-stakes.

Benefit

Prepare a company to go public — controls, reporting, governance, and the S-1 workstreams — well ahead of the offering.

Why get it

A company cannot sell shares to the public until the SEC declares its registration statement effective, and the filing needs audited financial statements. Gaps found early are cheaper to fix than gaps found in the middle of an offering.

When you benefit

Usually a readiness phase of many months before a filing, then support through the offering and the first reports as a public company.

What it costs

Typically a project fee.

When you pay

Often hourly or a monthly retainer, because the scope shifts as the company's plans and timeline firm up. Fixed fees are common for defined pieces, such as a controls assessment. Underwriter, legal and auditor fees are separate.

Other costs

Audit fees, securities counsel, filing and printing costs, underwriter compensation, upgrades to accounting and reporting systems, and exchange listing costs.

Risks to know

A company that is not ready can see its filing delayed or its offering postponed. Public companies face ongoing SEC reporting and must assess their internal control over financial reporting, so weak controls found late are costly. Market conditions can also change while the work is under way.

When risks arise

Gaps tend to show up in the audit, in the SEC's review of the registration statement, or in the first reports after listing. A favorable market window can close while a company is still getting ready.

The process

The advisor assesses reporting, controls, governance and the capital structure against what a registration statement and public reporting require. It builds a plan, helps close the gaps and coordinates with auditors, counsel and underwriters. The company keeps the decision about whether and when to file.

Your commitment

Leadership sets the goals and timeline and names an executive owner. The company gives access to its financials, controls, contracts, board records and ownership table, and commits finance and legal staff to the remediation work.

Documents to gather

• Audited or reviewed financial statements for recent years
• Capitalization table and equity plan documents
• Board and committee minutes
• Existing accounting policies and internal control documentation

Helpful reading

• Ready to Go Public? — U.S. Securities and Exchange Commission
• What is a Registration Statement? — U.S. Securities and Exchange Commission
• Going Public — U.S. Securities and Exchange Commission

Further research

• 15 U.S.C. § 77e (Securities Act of 1933, Section 5) — registration required before securities are sold to the public (federal)
• 17 CFR Part 229 — Regulation S-K, disclosure requirements for SEC filings (federal)
• 17 CFR Part 210 — Regulation S-X, form and content of financial statements for SEC filings (federal)
• 15 U.S.C. § 7262 (Sarbanes-Oxley Act, Section 404) — management assessment of internal control over financial reporting, with an auditor attestation that does not apply to emerging growth companies (federal)