IPO Readiness Checklist: Key Steps for CFOs

As a CFO, preparing your company to go public can feel like a daunting endeavor. Finance leaders often say it’s the hardest 12-18 months of their careers, marked by a firehose of meetings and aggressive filing and reporting deadlines. While perhaps overwhelming, the mountain climb to the public markets also can be an incredibly rewarding time — if you plan carefully and take informed action.

To successfully make the leap, your company will need to meet stringent Securities and Exchange Commission (SEC) requirements for financial reporting, internal controls and other key areas. You play a pivotal role by establishing efficient processes, implementing the best technology to ensure regulatory compliance, putting the right people in place and orchestrating their efforts (this extends well beyond the people who report to the CFO). In short, you set the stage to help the company thrive as a public entity.

The initial public offering (IPO) journey spans six phases. All introduce clear priority areas and actions that CFOs must take to successfully navigate the process. This end-to-end checklist shows you what to start working on in each phase to help you sidestep hurdles and stay on track.

Phase 1 (Months 1-4): Lay the Groundwork

This phase of the IPO process is all about building a solid foundation. During these initial months, your company should establish a clear reporting mechanism to both the board and shareholders. You also must start considering any governance or legal hurdles, to ensure the company complies with the necessary regulatory frameworks before you proceed with public filings.

• Create an IPO steering committee that directs all IPO activities and regularly reports to the Board.
• Establish a project management structure. As CFO, it’s your job to establish a project management office (PMO) to oversee the IPO’s progression. Formalize a project management structure and reporting process to the Board and ownership to serve as the PMO through Phase 5.
• Conduct an IPO organizational readiness assessment. Make sure key financial processes, reporting systems and compliance measures will meet regulatory requirements for public listing.
• Upgrade financial statements for SEC compliance, including preparing SEC technical accounting memos. Align all financial disclosures and reporting practices with SEC requirements.
• Evaluate and start addressing priority tax accounting issues. This includes structuring and entity reorganization, tax receivable agreements, tax due diligence, state and local tax, net operating loss availability (Section 382 analyses), research and development, international tax impacts and compensation.
• Establish public company interim and local tax reporting. Review and streamline existing tax reporting processes to ensure they meet public company standards and regulatory requirements.
• Enhance monthly, quarterly, and annual closing processes. Assess and optimize these processes to ensure accuracy, efficiency and compliance with public company standards.
• Review, analyze, and educate the company on new or proposed equity plans. Make sure your equity plan aligns with public company standards and clearly communicate its benefits to all stakeholders.
• Evaluate tech infrastructure. Conduct a comprehensive assessment of existing technologies to begin upgrading your core finance business applications (ERP, equity accounting, budgeting/forecasting and tax systems) to support increased reporting demands and scalability. Early technology assessment is key, as implementation and training users on a new system can take time. For example, a new ERP can take 9-18 months to get up and running.
• Identify key environmental, social and governance (ESG) topics and listing requirements. Review industry standards and regulatory requirements to pinpoint critical financial and material ESG topics for compliance and disclosure.
• Establish talent strategy: Identify key public company hires, assess current and future compensation structures, and develop recruiting and retention plans.
• Refine your equity story and identify relevant metrics. Align your strategic objectives with key performance indicators that clearly demonstrate value and growth potential to investors. For example, revenue growth rate, profitability (net income or EBITDA), gross margins, burn rate, customer acquisition cost, customer lifetime value, debt-to-equity ratio, churn rate and market share.
• Develop value prop and investor communications. Develop and refine a concise value proposition statement. Start developing investor communications.
• Enhance Human Resources (HR) protocols: Start developing public company HR policies. Consider outsourcing some HR functions.

Phase 2 (Months 5-8): Strengthen Finance and Accounting Operations

This phase is often viewed as the backbone of IPO readiness. As a public company, you’ll need to report quarterly financial results, including metrics that help tell a compelling story about your performance and opportunities. To smooth the transition, the finance team should practice the steps involved in preparing and releasing quarterly financial statements, as if you were already public.

• Coordinate Public Company Accounting Oversight Board (PCAOB) audit activities. Engage with PCAOB auditors early to address any gaps and ensure compliance with public company standards.
• Coordinate quarterly reviews using Statement on Auditing Standards (SAS) 100 guidance. Work closely with auditors to schedule and manage these reviews, addressing any issues promptly to meet regulatory requirements.
• Get valuations to unwind private company elections, support stock compensation reporting and assist business valuation for marketing purposes.
• Create and distribute regular employee communications. Clearly outline your IPO plans and keep employees updated to bake in transparency and build trust.
• Evaluate and fill Board gaps. Assess the current and future needs of your Board and recruit necessary resources to provide the expertise and support required for effective public company governance.
• Define roadmap for new technology needs. Prioritize key infrastructure upgrades, deploying scalable technologies and optimizing processes to enhance operational efficiency and meet the increased demands of a public company.
• Execute tech implementations and improvements. Upgrade core finance systems to make sure they are scalable, efficient and capable of handling the increased reporting and compliance requirements of a public company. Integrate cloud and automation solutions as needed to support data-driven decision-making, cybersecurity and compliance post-IPO.
• Upgrade to a public company equity administration system. This system should streamline equity management, ensure compliance with reporting requirements and provide transparency to investors.
• Formalize ESG strategy and roadmap. Identify key ESG priorities. Set measurable goals and bake in sustainable practices to meet investor expectations and regulatory standards.
• Conduct financial modeling. Run ongoing financial modeling for earnings per share and long-range planning guidance to ensure company projections align with investor expectations.

Phase 3 (Months 9-11): Prepare for Public Company Requirements

In phase three, shift your focus to the operational aspects of being a public company. As you edge closer to your target IPO date, investor relations and capital markets strategies become more important. It’s also critical to put in place the mechanisms that help guarantee your organization will be well-positioned to attract the right kind of investors and media attention.

• Assist in preparing SEC filings and support responses to SEC comment letters. Work with financial and legal experts to prepare accurate filings, including Management's Discussion and Analysis (MD&A) and pro forma statements. Assemble a team to address and respond to SEC comment letters.
• Enhance budgeting and forecasting capabilities. Implement advanced financial planning and analysis (FP&A) tools and processes to improve the accuracy and efficiency of budgeting and forecasting.
• Establish an internal audit and Sarbanes-Oxley (SOX) compliance roadmap and assess gaps. Conduct a thorough review of existing controls, engage with audit and compliance experts, and implement a structured plan to address shortfalls.
• Formalize IT and cyber policies, assessments and SEC disclosures. Collaborate with IT and cybersecurity experts to draft comprehensive policies and perform detailed risk assessments. Work with legal and compliance teams to integrate these policies into SEC filings and ensure they address all regulatory requirements.
• Finalize external communications policies. Establish clear guidelines for managing public relations, investor communications, and media interactions.
• Develop investor relations and marketing. Build a robust investor relations function and enhance business marketing by creating strategic marketing communication plans, engaging with potential investors and promoting the company's value proposition effectively to the market.
• Build a virtual roadshow. Complete roadshow presentations, ensuring the company’s value proposition is clear and well-communicated.

Phase 4 (Months 11-14): Finalize the IPO Strategy

While you continue to work on previous checklist items, it’s now time to turn your attention to ESG. Investors increasingly prioritize sustainability when making investment decisions. Demonstrating strong ESG performance can help you enhance your company’s reputation, attract investment, mitigate risks and comply with regulatory requirements, ultimately supporting long-term value and sustainable growth.

• Execute ESG roadmap and measure performance. Track progress with relevant metrics, and regularly report performance to demonstrate your commitment to ESG goals.

Phase 5 (Months 15-18): Complete Final Preparations

In this final pre-IPO phase, work with your organization to wrap up all outstanding tasks in the previous phases and prepare for launch. Work closely with your executive team to guarantee all financial models, projections and public communications are polished and ready to be scrutinized by potential investors.

• Outsource internal audit (including IT testing). Consider outsourcing internal audit functions to outside experts to ensure comprehensive evaluations, identify potential risks and maintain compliance with public company standards.

Phase 6 (Post-Transaction): Manage the Transition

It’s not just about getting to the IPO; it’s about setting your organization up for long-term success as a public company. While you’ll face heightened scrutiny and be tied to ongoing reporting obligations, all the thoughtful preparation you complete beforehand will help the company continue to evolve and grow.

Ultimately, going public marks the beginning of a new phase of responsibility and opportunity. The post-transaction period is vital for solidifying operational and financial processes, ensuring that the company can deliver on the promises made.

• Maximize shareholder value. Continuously assess and refine the company’s financial metrics and market position.
• Implement new HR policies for public company employees. Incorporate regulatory requirements, updating benefits and compensation structures and aligning with corporate governance standards.
• Manage equity and share-based compensation accounting. Implement a robust system for regularly updating and managing equity and share-based compensation accounting by integrating automated tools, conducting periodic audits and ensuring compliance with accounting standards and SEC regulations.
• Prepare ESG report and integrate into financial reporting: Keep measuring performance against the ESG roadmap you previously developed and adhere to annual ESG reporting.
• Provide continuous modeling. Regularly update financial models, incorporating new data and analyzing performance metrics to inform strategic decision-making and forecasting.
• Prepare SEC reporting. Comply with ongoing SEC reporting requirements (Forms 10-Q, 10-K and 8-K).
• Develop investor relations and PR. Communicate financial information to investors, shareholders, government organizations and the overall financial community.

Streamline Your Path to Going Public

Ready to begin the process of going public or want to better understand what the next moves for your business should look like? We can guide you every step of the way. Schedule a free strategy session to explore how our IPO Readiness experts can help you assess your readiness, outline your goals and determine your most efficient path to the public markets.