which stock exchAnge? .
Understand the benets o the alternative stock exchanges—NYSE, Nasdaq,NYSE AMEX or even AIM in London. Analyze the listing standards o your preerred market to ensure you willqualiy to list there.
BoArd And committees.
Reassess the composition o your board o directors and board committees toidentiy any changes necessary to satisy exchange listing requirements and SEC requirements. Understandthe requirements or independent directors and the transition rules that will apply ater your IPO.
Begin to act like a public company. Focus on corporate governanceappropriate or a public company and develop a culture o compliance. Work with counsel to adopt state-o-the-art corporate policies and codes o conduct.
Build out your senior management team, as necessary, to operate as a public company.
Consider engaging a compensation consultant to assist in analyzingcompensation practices, including equity and non-equity incentives. Begin to develop a compensationstructure appropriate or a public company.
internAl FinAnciAl controls.
Discuss with your advisors any “material weaknesses” or “signicantdeciencies” in your internal nancial controls and understand their impact on your SEC review. Be prepared todiscuss these orthrightly with your underwriters and to disclose them publicly.
Understand the transition period over which you will need to become compliant with theinternal controls testing required by Section 404 o the Sarbanes-Oxley Act. Consider engaging an accountingconsultancy rm now to assist with compliance.
Ensure that your audit rm is properly “independent” rom your company under PCAOB and SECrules. Don’t hire employees o your audit rm without rst understanding whether that will compromise therm’s independence. Understand what relationships there may be between your auditors and your ocers anddirectors, including whether the rm has provided any tax services to your ocers.
Discuss with counsel the rules that will govern your public communicationsduring the IPO process. Standardize public communications to establish a track record, and developconsistent processes or external communications, including review o press releases by outside counsel.Beware o media interviews and public appearances, including industry or analyst conerences.
Perorm a review o your company’s website to ensure that the inormation on thewebsite is accurate and current. Work with counsel to make sure that the website is consistent with SECpositions on acceptable public communications prior to an IPO and permissible website content.
Understand the provisions o your current charter, bylaws and other corporatedocuments as they relate to an IPO. Who has registration rights? Are any special approvals required romstockholders or third parties? Will your preerred stock automatically convert? Are all stockholders andoptionholders required to sign 180-day “lock up” agreements with your underwriters? Make sure that yourcapitalization records accurately refect all stock issuances, transers and cancellations, as well as option andwarrant issuances, exercises and cancellations.
25 ConsIderatIons In PreParIng for an IPo