Private company founders, investors, and executives are tempted to consider their options and the pathway to a public offering with the current IPO market in full swing. Investors who once focused on near-term or even current profitability are now seemingly more willing to buy into a company whose first quarterly profit is at least two years off.
But that doesn’t mean any company can roll up to public markets and expect a successful public launch. The IPO process takes several months of preparation and execution. Deloitte understands there’s no one-size-fits-all strategy. That’s why our approach is unique. Our IPO services professionals offer companies a distinctive, personalized IPO readiness experience. Understanding some of the key mileposts is essential before beginning down that road.
Preparation for an IPO can take up to a year and involves significant resources. During the IPO stage, companies must present a convincing growth story, illustrated by their financial data. Throughout your IPO journey, Deloitte’s IPO services team can help guide you through a personalized IPO readiness checklist and navigating the reporting obligations that follow listing.
Investors are deeply interested in growth stories. As such, customer metrics like subscriptions or renewals, unit sales, and both financial and non-financial metrics like free cash flow and user information are critical. A typical IPO document details these key performance indicators (KPIs), establishes a benchmark, and the company returns to some or all KPIs in future earnings releases.
In the same vein, consistent and predictable forecasts can form the bedrock of strong relationships with the market, investors and analysts. Thus, accurate forecasting is a regular part of IPO readiness discussions, leading to discussion around data analytics, tools to develop deep customer and business insights and overall improvements in finance processes and policies. While there are no guarantees in a company’s financial performance, investors, and analysts prefer surprises to be kept to a minimum. Therefore, public companies should consider building foresight, caution and risk in the forecasting models.
At the heart of an IPO readiness discussion lies all things financial reporting. Conforming to SEC rules and regulations and PCAOB audits requires a company to understand any current gaps in financial reporting and establish a transparent process for collecting and verifying critical financial data in a timely way. In addition to assessing IPO readiness and developing a checklist, Deloitte can help develop accounting policies, facilitate non-US exchange listings, and provide assistance with US GAAP to IFRS conversions.
While technical accounting and SEC financial reporting discussions are common, there is significant discussion around people, processes and technology with respect to overall financial reporting. The company needs to be able to close the books quickly on a quarterly basis and provide accurate financial information to the street. Understanding and optimizing the company’s current close processes are services Deloitte’s IPO services professionals can provide.
And then there is the larger matter of governance and oversight — a board of directors to guide management, build relationships with investors, provide oversight over key policies, pose challenging questions about the company’s outlook, and so on. An effective board represents a diversity of skills, outlooks and backgrounds, all of which can be a source of strength to the CEO, CFO and other leaders.
A key element of Deloitte’s IPO services offering is an interactive, half-day workshop. Each workshop is led by a multidisciplinary team of IPO veterans who recently led clients through the IPO process. This confidential workshop is tailored to each company and its unique needs. Our workshops are the first step in helping to prepare an organization for an IPO. Following our workshop, our dedicated team of IPO services veterans can guide companies through the process as they develop essential timelines and reach critical milestones.
Innovation is woven into the fabric of any company considering an IPO. It’s what drives a team to excel, and it’s a key competitive edge. This is also the case with the tools Deloitte’s IPO services team uses. Our suite of innovative tools helps to create a complete financial picture for companies to monitor performance and contribute to the value of the IPO.
Calling upon decades of experience, our team helps companies avoid pitfalls and overcome obstacles, making for a timely IPO process and smooth transition to a public company.
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