3. Preparing for a Successful Offering 18

have and disclose at least one member who is a ”financial expert”, defined as: 1) having experience as a principle financial or accounting officer, controller, accountant, or auditor; or 2) having experience overseeing or assessing the performance of companies with respect to the evaluation of the financial statements; or 3) other relevant experience (investment bankers, venture capitalists, commercial bankers, financial analysts);
be directly responsible for the appointment compensation and oversight of the company’s independent auditors;
have authority to engage independent counsel and advisors as deemed necessary to carry out their duties; and
establish procedures for dealing with concerns received from employees and others regarding accounting, internal control, or auditing matters.
For more information, please request the PricewaterhouseCoopers report on Audit Committees.
Evaluate corporate governance principles and practices
Both the NYSE and NASDAQ recently approved new corporate governance listing standards that need to be addressed in connection with an initial public offering and listing of a company’s equity securities. These listing standards address matters such as board composition, structure, and process — including nomination of directors, compensation practices, and similar matters — and
are responsive, in part, to the Sarbanes-Oxley Act. The standards, however, go beyond the provisions of SOA discussed previously and address such matters as the establishment of a code of business conduct and ethics for employees and directors, the establishment of an internal audit function for companies listed on the NYSE and approval of related-party transactions for companies quoted on NASDAQ. In light of these developments and given the level of interest by institutional investors and the investing public in corporate governance matters, it is important for companies to take a close look at their corporate governance principles and practices when planning the public offering process. For further information on this topic, please refer to http://www.pwc.com/uscorporategovernance.
Build a positive public image
A positive image can enhance the initial sales effort and maintain the public’s interest in the stock in the aftermarket. Accordingly, most companies will need to enhance or create such an image with those who will buy the company’s stock and with those who influence that buying decision (e.g., financial analysts, stockbrokers, the financial press, and industry publications). A positive image cannot be developed overnight; it can take months or even years to accomplish, so the earlier you get started, the better. Further, it is important that the building of the public image start well before the beginning of the “quiet period” (see “TheGoing-Public Process,” page 34).
18
PricewaterhouseCoopers LLP Roadmap for an IPO

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