The IPO is not the end of the story—it is only the beginning. Once listed, a company will be under far greater public scrutiny and will have a range of continuing obligations with which to comply. Any weakness in systems or failure to comply with regulations could cause management public embarrassment, reputational damage, and the potential for company and personal fines. The benefits of careful preparation and planning are realized within the first year of the IPO
 
Public companies are required to comply with a host of reporting and other requirements. The most significant change for many companies is the need to close and report publicly on their financial results on an accelerated timeline and to comply with Sarbanes-Oxley requirements. This is a process the company will need to be fully prepared to meet; the inability to meet these requirements will shake investor confidence or subject the company to a delisting. Throughout the IPO process, the company will need to be prepared to discuss their Sarbanes-Oxley readiness plan and must be sure that it can comply with these requirements.
 
Preparing for life as a public company should happen in parallel with the process the company undertakes for its IPO. The company should take stock of its processes and infrastructure so it can make any necessary changes in advance of the IPO date. Key questions to ask include:
 
• Do we have the ability to close our books accurately each quarter and report the results to the public in accordance with SEC guidelines? Do we currently have a repeatable monthly and quarterly close process?
 
• Does our finance department have the expertise with SEC accounting and reporting requirements to allow us to comply with regulations we did not need to consider before as a private company (e.g., stock compensation and segment reporting)?
 
• Does our planning and analysis function have the ability to accurately forecast our results to allow for more effective interaction with the investor community and to assist in analysis of the current period results for reporting purposes?
 
• Are all our processes and controls adequately documented and tested to comply with our Sarbanes-Oxley requirements?
 
• Does our technology infrastructure adequately support our compliance efforts?
 
• Have we established an ethics and compliance process and communicated it throughout the organization?
 
This preparation process can often be lengthy, depending on the current maturity of a company’s existing processes. It is vital that the company understand and address any gaps before going public. The magnitude of the required improvements will determine the number of resources required. Many companies have resource constraints during the going-public process, during which there is so much attention being paid to the initial filing documents and the marketing efforts.