Talk about hype. There’s so much hoopla surrounding the decisions and details that go into the initial public offering and day of the offering itself. Just consider how much we all heard about Chinese e-commerce company Alibaba before its $25 billion IPO. But what about the day after, when the bankers and advisors have gone back to their offices and those hotly debated predictions about the first day of trading no longer matter?
That’s when the real work truly begins. The company has to keep that momentum of the IPO going and keep moving forward, moving on from the dotting of the I’s and crossing the T’s of the S-1 to carefully crafting the first rounds of quarterly and annual filings, proxy statements, the earnings releases, not to mention those first discussions with investors and analysts. These firsts will hone in on the fact that the discussions have shifted, the tone has changed, and the scrutiny is heightened for the new public company.
In a new RoseRyan intelligence report, Ensuring a smooth ride as a newly public company, technical accounting guru Kelley Wall outlines six key finance areas these post-IPO businesses need to conquer. These are the spots that can get overlooked in the rush to go public, without as much thought put into actually being a public company. Here are those actions these businesses should be taking during this transitional time:
- Gathering the right resources: The financial-reporting workload has multiplied and so have the coordination efforts that make it all possible. “Even companies that had a rock-star finance team as a privately-held company need to scale up for public life so they don’t go flying over the handlebars,” Wall writes.
- Having disclosure committee members who understand their contribution to the process: Unfortunately, we have seen firsthand committee members who are unsure of their roles and have a focus that is too narrow minded. The effective ones know to ask about information they may not be seeing in regulatory filings. They don’t just take a check-a-box approach to their reviews of SEC filings.
- Ridding the SEC filings of red flags: Internal reviewers may miss questionable spots that would catch the attention of the SEC staff, which often looks not just at 10-Qs and 10-Ks but what is getting said on the company website, in analyst presentations, earnings releases, and, in particular, non-GAAP figures.
- Ensuring the tight financial-reporting schedule has minimum risks: A big change for public companies is the turnaround times for reporting, and in the move toward efficiency, problematic areas can creep up. With more eyes watching what the company is doing, cutting out key processes and oversight may create a big risk for a restatement.
- Meeting investor and analyst expectations: This is often new territory for many newly public CFOs. Executives who are speaking to the public will need to be evermore careful and thoughtful in what they say, and care should also be taken to limit surprises to the Street.
- Making sure the finance team has an eye on outside happenings: There’s always a mix of proposed rules and regs that could affect companies greatly if they go into effect. They can have accounting implications and could lead to restatements if companies are not prepared.
New public companies face a whole new world that is watching their every move. To minimize any missteps, you have to know what they are. Download Ensuring a smooth ride as a newly public company to learn more.
