Content We Love — How an IPO Process Really Works

The IPO process is oftentimes either misunderstood or cloaked in mystery. However, an article recently published by Forbes takes an in-depth look at the IPO process. Written by Howard Lerman, founder and CFO of Yext, a company that just recently became public, the piece aims to remove a bit of the mystery that surrounds the process of going public.

“Being public has always been our destiny,” Lerman said. “We do not want to favor one company or brand. We need to be independent…” [1]

Moving from the private sector to the public sector, however, can be costly, especially because of the need to build a strong compliance infrastructure in order to meet the requirements of additional financial regulations from the SEC and increased scrutiny from investors. Lerman revealed that the company had been working on building their compliance framework for two years before they sold their first share publicly in order to be ready when Sarbanes-Oxley, among other regulations, officially applied to their company operations.

Lerman also mentioned the need to hire additional team members with strong public experience and audit preparedness measures, all costing millions of dollars.

Howard commented, “It’s amazing the kinds of systems you need to put in place, so do you not have any material weaknesses.” [1]

Yes, engaging in the IPO process can be costly, but, as Lerman also points out, it can have notable advantages, such as increased brand awareness and options for employee compensation, in addition to the increase of funding for future growth. If you move forward toward an IPO, with these advantages top-of-mind mind of course, it’s important that you carefully consider and take full advantage of all the tools that can prepare for you for this next step. Not only will they help you pre-IPO, but they’ll also support your success for years to come.

If an IPO is in your company’s future, it’s important that you thoroughly investigate how to automate your compliance framework and to make sure your financial statements can hold up to the additional requirements and scrutiny. Automation ensures that you and regulators have visibility into every step and each piece of supporting documentation that makes up the financial close process. Consequently, you will be strengthening the integrity of your resulting financial statements and reducing the risk of a damaging misstatement.

As you prepare for the possibility of a future IPO, discover how automating your controls and compliance can help you make this complicated process a success.

To read the Forbes article in full, please click here.

 

Written by: Caleb Walter and Chelsea Downey 

 

[1] Taulli, T. (2018, June 12). How An IPO Really Works. Retrieved from https://www-forbes-com.cdn.ampproject.org/c/s/www.forbes.com/sites/tomtaulli/2018/06/10/how-an-ipo-really-works/amp/

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