Has your company received venture capital funding?
Many early-stage companies that do not have a proven track record increase credibility and can validate their business concept, product, or service before they go public by selling a portion of their equity to venture capitalists.
Investment from venture capital sources is viewed as “smart money” which can also help increase valuation leading up to an IPO.
Has your company reached the point where prospects for maintaining a strong sales and earnings growth trend in the future are reasonably good?
Many companies that have successfully gone public have shown market support for their product or service that would sustain an increasing annual growth rate for a ﬁve-year period. This growth potential should be even larger if institutional investors are expected to buy signiﬁcant blocks of shares in the company. Again, the exception might be the early-stage technology company that has developed to the point that the risks usually associated with a venture capital investment — product development, manufacturing capability, market acceptance, and market size — have been reduced.
Are your company’s products or services highly visible and of interest to the consuming and investing public?
The established company can answer this question with historical sales data, while the early-stage company must use market research projections and demonstrated product superiority. In fact, the early-stage company usually qualiﬁes as an IPO candidate because of the uniqueness of its product
Has your company developed the necessary ﬁnancial processes, associated internal controls, and ﬁnancial statement integrity to support management’s reporting obligations as a public company?
The Sarbanes-Oxley Act of 2002 (SOA) was enacted on July 30th, 2002, largely in response to a number of major corporate and accounting scandals involving some of the most prominent companies in the United States. SOA, among other things, established a new requirement that CEOs and CFOs explicitly evaluate and report to the public on the effectiveness of speciﬁed internal controls over corporate reporting. Additionally, on an annual basis, the company’s external auditor is required to attest to management’s assertions about the internal controls and procedures for ﬁnancial reporting.
Is management capable and committed?
In any public offering, the quality of the management team is a key factor. To have credibility with the investing public, the organization must have experienced leadership that functions well as a team. In addition, ownership by management demonstrates to investors that it has a vested interest in
PricewaterhouseCoopers LLP Roadmap for an IPO