3. Preparing for a Successful Offering 20

Have your financial statements audited and resolve potential disclosure and accounting issues
A company that wants to go public needs to have audited financial information. It is easier and more cost efficient to perform audits of financial statements in the normal course of business, rather than shortly before going public. Further, the existence of audited financial statements provides increased credibility to your company. Another consideration is whether you’ve grown the business through acquisitions. If so, separate audited financial statements of businesses acquired
may be required at the time of the offering. Obtaining audited financial statements of these companies after the fact can be a difficult and costly task and could potentially delay your IPO timetable.
As your company gains financial sophistication, it should also begin preparing quarterly financial statements. More and more offering documents display the prior four, eight, or twelve quarters in order to reflect growth and trends.
Having them prepared timely can add to an investment banker’s evaluation of your company.
As noted in “Securities Regulations” (Appendix A) and “Current Regulatory and Disclosure Issues,” the company’s financial statements included in your IPO registration statement will have to conform to positions and practices prescribed by the SEC staff which may be different than financial statements previously prepared.
Draft management’s discussion and analysis (MD&A)
A stumbling block that many companies face is their inability to describe why the company’s performance was what it was. A registration statement and all future financial statement filings with the SEC will require inclusion of Management’s Discussion and Analysis or MD&A related to those financial statements. This is
a quantitative and qualitative discussion of your company’s performance. You will need to describe in depth such items as changes in sales volumes and cost
structures, liquidity and capital resources, sources and uses of cash flows, vendor relationships, employee compensation, unusual nonrecurring charges, significant environmental exposures, and other risks and uncertainties.
As you complete your year-end and quarterly financial statements, you should take time to write your MD&A. It is very difficult to remember why insurance costs went up or when a marketing campaign commenced three years after the fact. The practice of writing quality, comprehensive MD&As will expedite your registration process and will be a major step toward operating like a
public company.
PricewaterhouseCoopers LLP Roadmap for an IPO

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