IPO Preparation Checklist
An IPO offers private companies powerful growth opportunities however, it also entails them to regulations and rules that they weren’t required to comply with as a private entity. Therefore, it’s crucial for businesses to understand all the possible risks and pitfalls before making the step into the public markets.
If your company is thinking of an IPO or not, creating an ideal-practice checklist should be the first step to make sure that you’re ready for the process. The checklist for preparation for an IPO should include everything from due diligence to stakeholder alignment to financial data gathering and analysis. A thorough checklist will enable you to find and fill in the gaps between where your company is today and where it should be prior to you ring the IPO bell.
It’s a good idea to consult a tax expert if you’re planning on going public. This will enable you to understand the different types equity compensation and how they impact your tax cost. You can then prepare accordingly. For example, if you’ve made an 83(b) decision, you should be aware that you could be liable to a significant increase in your taxable ordinary income on IPO day. Additionally, if you’re using incentive stock options (ISOs), it is crucial to consider the possibility of an alternative tax liabilities that are minimal.
A checklist for preparing an IPO must provide information on the compliance requirements of regulatory compliance that come with an IPO which includes the Securities and Exchange Commission’s (SEC) registration and disclosure rules. The checklist for preparing your IPO should also outline the necessary steps to prepare and file your Draft Registration Statement / S-1, which includes the submission of both EDGAR and the iXBRL instance file.
