Ready, Set, IPO!

Ready, Set, IPO!


What is an IPO? defines it as: ‘An initial public offering (IPO) is the first time that the stock of a private company is offered to the public. IPOs are often issued by smaller, younger companies seeking capital to expand, but they can also be done by large privately owned companies looking to become publicly traded.’


1. Install formal financial controls

Once your company is publicly traded, it needs to comply with reporting requirements that can’t be met without setting up formal processes. Mistakes in reporting can be very costly and distracting for top management. Get the firm’s financial processes working with virtually no errors by the time you start selling shares to investors.

2. Hire a public company CFO

Employ someone who has previously overseen such financial processes well. Look for an individual who has served as the chief financial officer of a company (preferably in your industry) that’s already gone public.

Related: Is Your Business Fundable? Venture Capitalist Clive Butkow’s Shares His Priceless Insights

3. Build a strong board

To make your IPO work, you’ll also need a strong board of directors. Recruit board members with experience at public companies, particularly serving on a board’s committees.

The right board members will be able to help you grow your business. For example, find board members who can serve on audit and compensation committees to ensure that your financial reporting is trouble free and that your executive team is receiving competitive compensation.

4. Hiring a skilled executive team

Build an executive team with experience in hiring, training and motivating people in your company’s key functions, such as finance, governance, human resources and compliance — not to mention sales, marketing, manufacturing and product development.

5. Focus on strategy

Become skilled at articulating goals and communicating them in a way that allows others to easily see what they can do to realise them. Create an environment in which talented people can develop to their full potential while working on tasks that help your company go in the directions intended.

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6. Get ready for the IPO

With these foundational elements in place, work on the IPO. You’ll spend months negotiating with bankers and lawyers on key details. Once the prospectus is complete, you’ll present your company to big investors.

Peter S. Cohan
Peter Cohan is president of Peter S. Cohan & Associates a management consulting and venture capital firm. He is the author of Hungry Start-up Strategy: Creating New Ventures with Limited Resources and Unlimited Vision (Berrett-Koehler, 2012).