Filing for an IPO: What You Need to Know
May 15, 2014
By Marc Fogarty, CPA, CFE
IPO activity is booming with many companies considering this to be a great time to raise capital. If you’re thinking of taking your company to the public market, here are some things you need to know before meeting with the team that will help you achieve your goal.
The most underestimated expectation in filing for an IPO is the amount of time it takes. Generally, the IPO filing process can take anywhere from 4 to 6 months. Some companies are better prepared than others (perhaps they’ve been through an audit before), but it is important to take the time to do it correctly.
Here are the general steps and the approximate time it will take to complete them.
- Assemble Your Team -- The first step is selecting auditors, investment bankers and attorneys. Depending on the contacts the company already has, this process can take several weeks to set up meetings and make an informed decision.
- Prepare for Your Audit -- If the company does not have a PCAOB audit already completed by a PCAOB-registered audit firm, then expect the completion of that audit to take anywhere from 4-6 weeks. Please note: A company usually needs two years’ worth of audits (depending on its size) to be included in the filings.
- The audit process is comprised of planning, fieldwork and wrap up. All of these items take varying time commitments. Public filings get more scrutiny by the engagement, concurring, and technical partners.
- Prepare SEC Form S-1 -- Depending on the writing skillset of the company, the writing of the S-1 can take up to 4 weeks and can be completed concurrently with the audit process. It may be worth investing in a consultant who is an expert in preparing these documents.
- This process will include the company writing portions of the S-1 and both the company’s attorneys and the underwriters attorneys making edits.
- SEC Review -- Once filed, the SEC usually takes about 30 days to respond to the initial filing.
- Responding to the SEC comments can take 10-30 days before re-filing the amended document.
- The SEC comment and response process can repeat a few times and take almost 90 days in total.
- Final Steps - Once the SEC has no further comments, the IPO gets priced by the underwriters, the registration statement is declared effective, and then the company becomes public.
This is a general outline of the IPO filing process. Each company will have unique circumstances that will affect the IPO filing process timeline. Feel free to contact me if you have any questions.