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Getting Your Business Ready for an IPO

The concept of gearing up for an IPO can seem daunting for any business. Check out this blog for more information about getting your business ready for an IPO.

The concept of gearing up for an IPO can seem daunting for any business. An IPO refers to the first time a company offers its shares of capital stock to the general public. For many private companies, the process of going public will necessitate a fundamental shift in financial reporting and planning. IPO candidates will need to comply with the local regulatory requirements for their respective exchanges. In the United States, this means compliance with the federal Sarbanes-Oxley Act, including certifications of financial results by officers, U.S. GAAP accounting practices, and SEC reporting requirements. 

Ensuring compliance

The Jumpstart Our Business Startups (JOBS) Act provided some relief for qualifying emerging growth companies in the transition to full SEC reporting requirements. Nevertheless, investors will want to understand the company's history of financial reporting and business performance, so many companies will need to prepare quarterly results of operations for recent periods and a detailed presentation of management's discussion and analysis of financial position, results of operations, critical accounting policies, and capital resources. 

In addition, material weaknesses in internal controls will need to be remediated and disclosed. Needless to say, this can be a lengthy and resource-intensive initiative and may be difficult to manage in parallel with the ongoing responsibilities of the finance department.

Finance transformation

The finance department will also require a fundamental transformation as the company prepares to go public. Financial reporting in the public market requires companies to create and maintain strong processes and controls that stand up to the rigors of compliance. It is also strongly advised that the finance department be staffed by professionals with experience reporting to capital markets.

The market will also expect to see a strong and detailed financial plan, as well as robust forecasting and budgeting capabilities. Forecasting, in particular, will be critical to the management team as it strives to provide reliable earnings guidance as a public company.

How KPMG Spark can help

With KPMG Spark, you will have more time to spend on getting your company ready to go public. KPMG Spark is the new way to manage accounting for small business owners who struggle with DIY software and the never-ending administrative tasks of accounting. We take bookkeeping off your hands by leveraging intelligent automation, a custom financial dashboard, and a professional bookkeeper-in-the-loop. Contact KPMG Spark today to speak with an accounting specialist dedicated to your small to medium-sized business success.

The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG LLP.

This blog article is not intended to address or provide advice concerning the specific circumstances of any particular individual or entity and does not constitute an endorsement of any entity or its products or services.

Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.

The following information is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.

KPMG LLP does not provide legal services.

KPMG SparkSeptember 20, 2022Posted In: Accounting Info

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