A public offering can provide private companies with a lot of opportunities for growth, but it also entails exposing them to rules and regulation they were not required adhere to when they were private businesses. It is important for companies to understand all of the potential risks and challenges before taking the leap into public markets.
If you are contemplating an IPO for your business or not, creating a checklist of best practices is the initial step in ensuring that you are ready. A checklist for an IPO must be able to cover everything from stakeholder alignment and due diligence to financial data collection and analysis. A thorough checklist can help you to identify and close gaps between where your organization is today and where it must be prior to ringing the IPO bell.
If you’re planning on going public, it’s a good idea consult a tax professional to ensure that you’re aware of the various forms of equity compensations that could impact your tax bill, and to plan according to the potential tax consequences. For instance, if you’ve made an 83(b) option, be aware that you may be subject to a large increase in taxable ordinary income on IPO day. Also, if you’re a shareholder with incentive stock options (ISOs) it’s essential to be prepared for the possibility of alternative tax liabilities that are minimal.
A checklist for preparing for an IPO should also provide information regarding the regulatory compliance requirements associated with an IPO which includes the Securities and Exchange Commission’s (SEC) registration and disclosure rules. Your ipo preparation checklist should also include the necessary steps to prepare and file your Draft Registration Statement / S-1, which includes submitting both EDGAR and iXBRL instances files.
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