Strategies For Going Public

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Strategies for going

public 
Understand the process of taking a company

public and, ensure your organization delivers on
its growth strategy
Oct 05, 2022

# FINANCIAL MANAGEMENT GOING PUBLIC FINANCIAL CONSULTING CAPITAL MARKETS
What are the advantages and

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disadvantages of going public?
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The process of going public has a significant impact on any company and its
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employees. It is transformative for companies and should be considered

holistically to determine if it is the right strategy for the company. Below we
provide our perspective and observations for management’s consideration in
the process.
Advantages
Disadvantages
• Access to public capital
markets and funding • Costly process (in dollars
• Greater appeal to senior- and time)
level talent • Increased reporting and
• More transparency to regulatory requirements
investors and customers • Loss of control
• Increased public • Market pressures 
awareness
RSM’s weighing the advantages and disadvantages of going

public checklist provides more detail around these key considerations.
How much does it cost to go public?

The process of going public can be costly, in terms of both dollars and time. It
requires the attention and heavy involvement of the most senior levels of
management, which can distract from normal business operations.
The most significant financial cost is typically associated with the engagement
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of investment bankers to assist and advise in the transaction, the
compensation for which is often a percentage of the proceeds or deal funding.
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To assist in the process, the company will often also need to engage external
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advisors in the legal, HR, tax, accounting, and IT fields.
Going public may result in significant one-time or nonrecurring costs for these
advisors, all of which may fluctuate due to the size and complexity of both the
company and the deal itself. These costs include approximately 6% to 8% of the
total deal value for underwriter fees, 1% to 2% for legal fees, 0.5% to 1.5% for
accounting fees, and an additional 0.5% to 1.5% for other fees (printing, SEC
registration, etc.). In addition, management will need to consider increases in
recurring costs that may result from higher compliance costs, both internally
(e.g., for internal audits) and externally (e.g., for Public Company Accounting
Oversight Board audits), additional legal fees, directors, and o�cers insurance,
and more.

Going public may result in significant one-time or
nonrecurring costs for these advisors, all of which may
fluctuate due to the size and complexity of both the
company and the deal itself. These costs include
approximately:
6% to 8% 0.5% to 1.5% also, 0.5% to

of the total deal for accounting
1.5%
value for fees for other fees
underwriter fees (printing,Cookie
SEC settings
information on cookies and how we use them, click here. registration, etc.).
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In addition, management will need to consider increases in recurring

costs that may result from higher compliance costs, both internally (e.g.,
for internal audits) and externally (e.g., for Public Company Accounting
Oversight Board audits), additional legal fees, directors, and o�cers
insurance, and more.
What should be considered before you

go public?
Going public involves more than simply filing a registration statement with the
SEC and listing on an exchange. The e�ects will be felt throughout the

organization, so the decision requires careful consideration of a number of
important areas, including:
• Process and controls – Management will be required to certify the
company’s reporting and disclosure controls and demonstrate
establishment of an e�ective control environment that will be subject to
internal and external examination and testing.
• Information technology – Public investor reporting requirements often
demand that the company’s enterprise reporting system and general IT
environment and controls meet future-state requirements.
• Tax – Restructuring activities may be required to ensure the current
company owners receive the maximum tax advantages during this
process. In addition, management must ensure the company has
accounted for any potential tax exposures or obligations that may
a�ect
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click here. position.
• Human resources/capital – For a public company, a more robust talent Allow all
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management and development program, as well as an executive

compensation plan, may be required. Increased e�orts to integrate the HR
function throughout the organization may also be necessary.
• Financial reporting and accounting – Financial statements included in or
incorporated by reference into SEC registration statements must be
audited in accordance with PCAOB auditing standards, which typically
require additional supporting documentation and analysis as compared to
generally accepted auditing standards. Management is responsible for
preparing any additional information required.
• Financial planning and analysis – The company will be expected to have a
process in place for development of budgets and financial projections to
provide earnings guidance to the public. Engagement of experienced
professionals who can evaluate the company’s financial strategy will also
be required. 
• Corporate governance and compliance – The company will be required to
establish a board of directors and form committees focused on areas
such as audit and compensation. It must also establish a code of conduct
and an ethics and whistleblower program.
How long does the going-public

process take?
The timeline can vary by the type of transaction—initial public o�ering (IPO),
acquisition by a special purchase acquisition company (SPAC), reverse merger,
or direct listing. In each case, the process is complex and requires significantCookie settings
time to plan and execute to ensure success.
• From initial exploration to preparation and execution to active trading, anall
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IPO can take 12 to 18 months.

• For a de-SPAC transaction—in which a private company is acquired by a
SPAC, or blank check, company, resulting in the private company
becoming publicly traded—timing varies widely and is generally
dependent on the readiness of the private company to issue SEC-
compliant financial statements. However, a de-SPAC transaction typically
has a shorter turnaround than a traditional IPO—generally three to six
months, depending on the timeliness of SEC review during the comment
process.
• A reverse merger, in which a public company merges with a private
operating company and the private operating company is determined to
be the accounting acquirer, resulting in the private operating company
subsequently becoming a publicly traded company, has a similarly wide
range of timing and dependency on the readiness of the private company 
to issue SEC-compliant financial statements. A reverse merger is similarly
expected to have a shorter turnaround than a traditional IPO.
• Direct listings, also known as direct placement or direct public o�erings,
do not involve the creation of new shares; only existing, outstanding
shares of a company are sold, with no underwriters involved. Direct
listings will require the same filing and reporting requirements of an IPO
but, without the need for intermediate underwriting and marketing, may
be completed faster than a traditional IPO.
How will going public a�ect my

company?
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The company’s access to public funding and financing can unlock and enhance
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strategic options to build and grow the business. Having the appropriate
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infrastructure in place—including enhanced financial reporting requirements

and IT system capabilities, additional human capital and talent, and increased
focus on internal processes and controls—is paramount. The decision to go
public requires careful consideration of the investments in the process and the
cost of ongoing compliance versus the advantages of being publicly traded.
IPOs, SPACs, reverse mergers, and

direct listings

What are the requirements for an IPO or direct listing?
How does going public through a SPAC di�er from a
traditional IPO or direct listing?
How can my company prepare to be acquired by a SPAC?
What is the process to go public through a reverse merger?
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More insights around going public
INFOGRAPHIC
Taking your company VIDEO
public: Key timeline Is a SPAC the right route for ARTICLE
considerations your organization? A guide to going public 

TECHNICAL ACCOUNTING MERGERS & ACQUISITION TRANSACTION ADVISORY
# FINANCIAL MANAGEMENT
# SPAC
# FINANCIAL REPORTING
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Are you prepared for an IPO?
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Successful public companies started acting like they were public
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long before the transaction. Are you truly prepared? Take our 8-
question quiz to find out.
Take the quiz

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Strategies for going public https://rsmus.com/insights/services/ﬁnancial-management/strategies-for-goin...

High Contrast  United States  Newsroom  Events Subscribe

HOME / INSIGHTS / SERVICES / FINANCIAL MANAGEMENT

Strategies for going

Understand the process of taking a company

Oct 05, 2022

What are the advantages and

employees. It is transformative for companies and should be considered

RSM’s weighing the advantages and disadvantages of going

How much does it cost to go public?

advisors in the legal, HR, tax, accounting, and IT ﬁelds.

6% to 8% 0.5% to 1.5% also, 0.5% to

In addition, management will need to consider increases in recurring

What should be considered before you

information on cookies and how we use them,its ﬁnancial

management and development program, as well as an executive

How long does the going-public

IPO can take 12 to 18 months.

How will going public a�ect my

information on cookies and how we use them, click here.

infrastructure in place—including enhanced ﬁnancial reporting requirements

IPOs, SPACs, reverse mergers, and

What is the process to go public through a reverse merger?

More insights around going public

Taking your company VIDEO

public: Key timeline Is a SPAC the right route for ARTICLE

considerations your organization? A guide to going public 

Take the quiz

RSM US Worldwide locations RSM blogs

Services Newsroom Locations Africa Latin America Economy

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