While the IPO market looks poised to return to the healthier state of the 2000s, a variety of forces have transformed the nature of this market in the past decade. These changes complicate the IPO and public debt offering processes, while making it more important than ever for pre-public companies to achieve a confident state of public company readiness (PCR).
The demand for transparency in public offering initiatives – from regulators to shareholders – is almost at the point where financial transparency frequently matters as much as the bottom line. The pace and complexity of regulatory change continue to intensify as evidenced by the emergence of International Financial Reporting Standards (IFRS), extensible business reporting language (XBRL) rules, and new risk-based auditing and board oversight guidance, to name a few. Additionally, the window for the public markets opens and closes much more quickly than it did in the past. This means that companies pursuing a public offering must be ready in a much shorter time frame.
For these reasons, the need for guidance with regard to PCR and IPOs has never been greater. While public offerings require a wide range of organizational, legal, underwriting and external market expertise, it is the intention of this Guide to Public Company Readiness to focus on how organizations can be prepared for an IPO from an infrastructure and back-office perspective.
Infrastructure considerations – particularly those that relate to financial reporting; the efficiency of the financial close process; governance, risk management and compliance; and the information technology (IT) environment – frequently pose the greatest risks to the execution of an IPO. These considerations routinely are overlooked or underestimated by executive teams who, understandably, are more focused on managing their fast-growing companies.
Few, if any, IPOs have been executed successfully without a strong understanding of these issues. This guide provides a starting point for gaining that knowledge. It is designed to serve as a convenient and user-friendly resource that executives and managers alike at pre-public companies can consult to help achieve readiness and, ultimately, increase the odds of a successful IPO.
This guide is provided for general information only; it is not intended to give legal analysis or advice. If legal guidance is desired, companies should consult legal counsel or other appropriate advisers who can best address specific questions as they relate to their unique circumstances.
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