10 Milestones on the road to an IPO

You’ve grown your company from an idea into a burgeoning business and you’re considering the next step. It’s one of the most exciting times in your and your company’s life. Taking a company public is the pinnacle – and payout – for most entrepreneurs. Company founders and employees bring their offering to the public markets and investors have the opportunity to become shareholders. For all of the excitement of listing day, there are a number of milestones on the way.

It’s wise to understand what other successful teams have done to prepare for their Initial Public Offering (IPO) and ready themselves for life as a public company.

We’ll take you through each of the milestones typically associated with an Initial Public Offering and recommend actions to streamline the process (and avoid potentially costly mistakes) as well as suggest preparations for ongoing regulatory compliance and reporting that come with being a publicly traded company:

1. Build your team: Once you’ve made the decision to IPO, it’s critical to have strong internal and external teams. Select experienced partners with proven results in helping companies go public. In addition to Company Leadership, the Working Group includes key partners representing Law Firms, Financial Sponsors, Underwriters and Audit Firms. It’s wise to engage a filing agent like Toppan Merrill at the start because they can add significant value to the Working Group with expertise and tools to help manage the process more efficiently. Streamline and simplify the information gathering process by selecting a virtual data room, like Datasite®, to serve as a central, secure repository for all the information you’ll need to gather for the SEC filing.
2. Preparations and drafting: Affirm any style requirements before starting the crafting of your complete narrative of your company’s operations, including assets and liabilities, comprehensive financial, tax, legal and IP information, industry insights, market research and customer verification as well as potential Shareholder/Investor information. Prepare necessary exhibits and supporting pieces to the filing.It’s imperative that you initiate an assessment of your Corporate Governance and Internal Controls over financial reporting and identify enhancements in the control environment early in the process as sound financial reporting is the foundation of your future as a publicly traded company. If you haven’t already, implement a Sarbanes Oxley (SOX) compliance automation platform for increased reliability in reporting.
   It is also recommended to apply for EDGAR access codes (SEC filing codes). Submit Form ID to receive a Central Index Key and Confirmation Code (CIK and CCC) and then fund the account. For more information on EDGAR access codes: https://www.sec.gov/edgar/filer-information/how-do-i.

   Other things you should consider at this stage:
   To prepare financial and accounting documents, use the Toppan Merrill Bridge™ (Bridge) SaaS platform to establish best practices for creating periodic financial reports and prepare for post-IPO regulatory disclosure. Bridge makes management and updating of financials for SEC filings effective and efficient.
   For Sarbanes-Oxley compliance, ease the burden of the ongoing process with Toppan Merrill SOX Automation solutions that streamline and simplify the SEC requirement.

3. Initial filings: Rely on Toppan Merrill as your filing agent to help with the preparation of the HTML EDGAR SEC submission on Form S-1. (Note: A company can go public through other form types including Forms F-1, S-11, F11, and S-4. We also commonly see companies filing a confidential Draft Registration Statement before publicly filing an S-1.)
   The Stock Exchange application should also be filed at this time. Within 3 days of the initial SEC filing, your Underwriter will file with Financial Industry Regulatory Authority (FINRA). FINRA reviews IPO filings and provides regulatory guidance on what constitutes fair and reasonable underwriting arrangements.
4. SEC response: The SEC will begin its review of the filing and provide Comments to resolve questions, information gaps and concerns. Respond to these information requests via Amendments to the original filing until the SEC is satisfied with responses.
5. Roadshow begins: While the SEC review is occurring, the Underwriter will begin a “Roadshow” or series of Investor Meetings to present the offering in advance of the public offering. Given the tremendous importance of the Roadshow Presentations, create marketing materials to supplement the preliminary Prospectus that tell a compelling investment story.The “Red Herring” Prospectus: A prospectus with a disclaimer stating that it is a registration statement filed with the Security and Exchange Commission and that the statement is not yet effective. The disclaimer asserts that the information provided in the prospectus may be subject to change and that the information is not complete.
6. SEC filings: As the team is completing the final steps before the sale of securities begins an Acceleration Request should be filed.
   Executives and Officers of the newly formed public company are required to file initial insider ownership information and any initial public trades by filing SEC Form 3. For more information on Insider Transactions and Form 3: https://www.sec.gov/files/forms-3-4-5.pdf. Other things you should consider at the stage:
   A best practice is to set up a financial filing solution and initiate iXBRL mapping to prepare for the first 10-Q filing which is due within 45 days of becoming public. Rely on Toppan Merrill to help prepare the iXBRL mapping and use Toppan Merrill’s Bridge for SEC submissions.
7. Finalize SEC review: When all outstanding SEC comments have been resolved and the final amendment is filed, the SEC then declares the registration “Effective” and your company may proceed with its Initial Public Offering.
8. Pricing: Your issuer and underwriter set the offering price. After which, the IPO closes and the issuer and selling stockholders must release their shares to the underwriters. Institutional investors who have already purchased shares will receive their allocations and public trading will begin on the chosen exchange.
9. Final filings: Form S-8 and Form 4s (change in ownership, post-IPO) as well as the 424(b) Final Prospectus which includes pricing information and any information related to final pricing complete the transaction should be filed.
10. Begin life as a public company: From here on the company operates as a public company and must execute ongoing periodic and interim reporting, produce shareholder communications and proxy statements and comply with the Sarbanes-Oxley Act of 2002 that mandates practices in financial record keeping and reporting for public companies. Lean on the experts and purpose-built solutions from Toppan Merrill for your required regulatory filings and communications.

Every IPO journey is unique — We’re here to help

Although these steps are the most common in the path to an IPO, every IPO has its own unique complexities, additional requirements, unexpected delays and barriers. To ensure a smooth journey start by building out strong internal and external teams with trusted advisors that have walked this path many times before. Toppan Merrill has the deep subject matter expertise and decades of experience, supported by proven technology, to help to navigate the bumps and anything else that may come up along the way.

Visit our Capital Markets IPO page to learn more — or connect to one of our experts at [email protected] or by calling 800.688.4400.