Friday, February 24, 2017

Douglas Battista: IPO Considerations

Scheduling an IPO is the dream of many entrepreneurs, says Douglas Battista. However, it’s not as easy as printing out a few stock certificates and slapping up a “for sale” sign. The major trading platforms, NYSE and NASDAQ, have strict financial requirements before a company can go public. Once those are met, there is still much work to be done.

Douglas Battista explains that planning an IPO is the most important step. A business owner must first have the right management team in place. Senior managers must exhibit strong financial skills and the ability to follow complex accounting procedures. Communication skills are vital as well, says Battista, especially if C-level staff have never experienced an IPO.

According to Douglas Battista, a financial reporting system upgrade is often in order. Public firms can’t get by on poorly kept QuickBooks records or cash accounting. Statements must be free of errors and the company must have procedures in place to ensure it will comply with Section 404, when applicable, says Douglas Battista.

Investment banker selection must take place before an IPO. In this “beauty contest” phase, the business owners/founders meet with financial partners to ensure they have the right capabilities needed to proceed. These experts also act as guides to help management determine if the company is truly ready for a public offering.

Once the choice has been made to move forward, it’s time to get paperwork together and begin the filing process, which, as Douglas Battista explains, is long and arduous. The IPO cannot be priced until the SEC has cleared it and it’s been filed with FINRA.

There are a number of other steps required before launching an IPO, says Douglas Battista. Anyone interested in taking a plunge into the public pool should consult their senior staff as well as an unbiased third party. There are pros and cons to making the move, but the potential payoffs make the risks worthwhile for those businesses willing to do the hard work.