IPO? What You Need to Know: The Kickoff Planning Meeting

Founders and executives of mature private companies often underestimate the complexity and lead time of the initial public offering process. The right timing is crucial for a successful IPO so it is critical to be ready to go when the company’s results and capital market windows align. If your company is considering an IPO, we recommend starting the IPO readiness process at least 18 months to one year before you anticipate the launch of your IPO. The IPO process can be all consuming for months or weeks as a company prepares its S-1 for filing with the SEC so generally doing more in advance leaves more bandwidth for management to run the business during the IPO. In addition, some of the IPO preparedness efforts are worthwhile even if the company does not end up going public as the efforts could be leveraged in connection with preparing the company for sale.

IPO planning is a joint effort requiring input from your CEO and top executives, finance and accounting staff, outside auditors, internal and external legal counsel and others. We recommend holding a kickoff planning session to focus the team and assign responsibilities for the long term planning and preparedness effort. Outlined below are some of the key planning items you should consider at your first official IPO planning meeting.

Sample IPO Planning Meeting Agenda

1. Introductions

2. IPO Timeline

3. Key Pre-IPO Planning Items

A.   Accounting Issues/Auditor Coordination
• “National” review
• Significant accounting policies/issues (e.g., cheap stock, 409A)
• Potential SEC comments
• Appropriate internal staffing
• SOX 404 internal control preparation

B.   Board of Directors
• Independence/mix of skills
• Enhanced audit committee independence/expertise requirements
• Board committees and charters: audit, compensation and nominating/governance
• D&O insurance

C.   Due Diligence
• Key diligence issues
• Material contracts
• Required consents or notices
• Confidential treatment requests (CTRs)
• Electronic data room

D.   Potential Claims 
• Intellectual property
• Employees or other service providers
• Commercial

E.   IPO Prospectus
• Identify public company comparables
• Prospectus summary, business section, MD&A, risk factors and use of proceeds
• Allocate drafting responsibilities
• Consider periodic IPO planning sessions

F. Publicity and Communications
• The pre-filing period
• Ongoing communication of “factual business information”
• Websites
• Post-filing

G. Corporate Governance Policies
• Code of Business Conduct and Ethics
• Whistleblower Procedures
• Insider Trading Policy
• Corporate Governance Guidelines (NYSE, Nasdaq)

H. Public Company Disclosure
• IR function
• Disclosure Policy (Regulation FD Policy)
• Current and periodic reporting (i.e., 10-K, 10-Q and 8-Ks)
• Disclosure Controls and Procedures

I. Corporate Structure
• Jurisdiction of organization
• Consider need for forward or reverse stock split
• Amendments to charter documents (articles and bylaws)

J. Anti-Takeover Protections
• Advance notice bylaw provisions
• Classified board
• Stockholder rights plan
• Consider in light of ISS/Risk Metrics recommendations

K. Liquidity Rights
• Stockholder agreements and registration rights agreements
• Required notices (e.g., warrants, stock options)
• Lock-ups/market-standoffs

L. Compensation Arrangements
• Establish/amend director and employee compensation arrangements, particularly equity compensation plans
• Employee Stock Purchase Plan
• Repayment/termination of director/executive loans
• Compensation Discussion & Analysis disclosure

M. Organizational Meeting
• Prepare for agenda
• Management presentations