01 Sep IPO Readiness Assessment
Whether through a special purpose acquisition company (SPAC), a traditional IPO or even being purchased by a public company, deciding to go public is a big step. As a public company, you will be held to a higher standard of accountability; it requires more financial discipline, effective planning capabilities, and a clear strategic vision. How do you know if you are ready? An IPO readiness assessment is your first step.
What is a Readiness Assessment?
An IPO readiness assessment provides insight and acts as a guide for a successful IPO process. The assessment includes a “readiness” checklist that assists in determining how ready your company is to go public. It also:
- Builds, monitors and tracks progress of the plan for a successful transaction
- Completes a current state and benchmark analysis against peers and identifies gaps including necessary public requirements
- Evaluates core capabilities to produce reliable financial reporting to ensure smooth financial close processes and compliance with corporate governance and regulatory requirements
- Identifies and prioritizes significant risks and deficiencies
- Develops an internal control framework, including a corporate governance structure
- Identifies how to efficiently utilize resources so the business does not fail due to the added burden
At the end of the readiness assessment, you’ll have a clear understanding and plan for how to “get there”. The ensuing recommendations, prioritized workstreams, resource requirements, and a timeline becomes the starting point for the company’s transformation.
Why Perform a Readiness Assessment?
Having a robust finance organization that can adapt to the rigors of the IPO process and outcomes is key. Submitting the required financial reports to regulators is critical and if the organization is unable to manage this, it will be damaging to shareholder value and credibility. Getting the right people, with the right capabilities, to deliver quality information at the right time is important to navigating a successful IPO.
The CFO Suite can help you get through this time when you might need that additional capability or capacity for your team.
Pitfalls of Omitting a Readiness Assessment
The pitfalls of not having an IPO readiness assessment are limitless. To start, you risk deprioritizing important details, key technology and other back-office functions. It’s all too easy to lose sight of these since leaders are so often focused on marketing, sales, and product development.
Other pitfalls include:
- Inability to understand the areas that lack maturity: It’s critical to understand which actions are urgent, the level of effort necessary to close identified gaps, and which resources to prioritize. You need these details to develop executable work plans and a timeline (with resource requirements) to implement appropriate solutions.
- Failure to assemble the right team: If your organization lacks the knowledge and bandwidth to participate fully, it is important to bring in the right kind of resources to support this endeavor. Remember, employees will have their regular responsibilities to manage; this transition only works if you can balance resources between IPO preparation and day-to-day business operations.
- Underestimating the level of effort required: The public company transformation journey involves a complex array of tasks, deadlines and focal points that require significant time, effort and attention throughout the entire organization. It requires a tremendous amount of effort and many of these tasks will have dependencies that need to be prioritized and resources that need to be allocated.
- Failure to fully develop sound SEC financial reporting and compliance processes: As a public company, you will be required to comply with new governance and financial reporting requirements. Many private companies lack effective processes and may not be able to withstand the scrutiny of the SEC. Failure to do so can be extremely costly.
How We Can Help
An IPO itself can be an enormous burden on your operational, accounting, finance, and IT infrastructure. Being uber prepared will ensure a smooth transition, but having the help you need is also essential. Our team at The CFO Suite has actively participated in IPO readiness and reviews. We have supported a wide range of organizations once they’ve gone public. Our IPO readiness process will help your organization not only have a smooth transition to becoming a public company but will also address ongoing compliance and regulatory requirements. Our experienced, game-changing consultants are ready to help you navigate this process.