Taking your company public through an Initial Public Offering (IPO) is an exciting milestone that opens doors to new growth opportunities and elevates your market presence. However, demonstrating audit readiness and preparing to file your SEC registration statement requires meticulous planning in regulatory, financial, and operational areas.
Your auditor is a key collaborator in this journey, working closely with you and your deal team to identify potential risks ahead of time and verify that your financial statements and compliance meet standards set by the Securities and Exchange Commission (SEC). Here are five ways to build a strong, collaborative relationship with your auditor that will minimize complications and help you complete a successful IPO that is on time and on budget.
1. Start Early to Set Clear Expectations
Ideally, engage your auditor 12 to 18 months before your target IPO date to align on timelines, deliverables, and scope. Understand how long your team can commit to the process and solidify roles as early as possible. Discuss your business model, objectives, and complex areas that could impact the PCAOB audit, such as revenue streams, acquisitions, past complex financings, equity awards, or other relevant areas. Early conversations about audit committee oversight and key milestones help your auditor plan their review, reducing last-minute surprises and creating flexibility to address issues.
2. Communicate Openly and Often
Your relationship with your auditor thrives on consistent, two-way communication. Schedule regular meetings to discuss progress, flag issues, and clarify SEC requirements. Share business updates that impact financial reporting, including new contracts, financings, identified material weaknesses, or other items that may cause complex accounting recognition and judgments, like potential derivatives or stock-based compensation. Encourage your auditor to raise concerns and work together to resolve them. This openness builds trust and keeps the audit on track.
3. Show Up Organized and Prepared
Arriving prepared with your documentation sets a positive tone for the audit, as your auditor relies on you to provide accurate, well-organized audited financial statements and supporting documents. Even if the accounting isn’t finalized, provide proper source documentation that details transaction populations, companies involved, options granted, and accumulated business transactions to give auditors a clear starting point. Consider supplementing your internal financing team resources with additional technical accounting/consulting resources to ensure robust documentation and compliance.
4. Build a Collaborative IPO Team
A successful IPO listing requires a unified team effort, bringing together auditors, management, the audit committee, attorneys, investors, investment bankers, consultants, and other stakeholders. Align everyone on IPO goals, timelines, and responsibilities, such as preparing registration statement disclosures, conducting due diligence, or strengthening governance. Regular cross-functional meetings ensure auditors’ insights are integrated with management’s strategy, legal counsel’s input, investment bankers’ financial structuring, and investors’ expectations. This team-oriented approach strengthens your filing and fosters trust across all parties.
5. Foster a Long-Term Relationship
Your auditor’s role doesn’t end when the opening bell rings; it continues to your compliance and growth after taking a company public. Involve them in discussions about your strategic plans, including investment banking relationships, secondary offerings, and a continuum of capital-raising or equity strategies, as well as industry trends, to help them tailor their approach for quarterly filings and annual audits. By working as a team, you’ll navigate challenges more effectively and build a solid foundation for long-term success.
Your Path to a Successful IPO
A strong relationship with your auditor is a cornerstone of IPO success. You can confidently navigate the audit process by starting early, communicating openly, preparing thoroughly, building a collaborative team, and fostering long-term collaboration.
“Throughout the IPO process, our relationship with Grassi was a constant source of clarity and support. Their team communicated openly, stayed involved at every stage, and showed they were just as invested in our outcome as we were.”
-Heather Atkinson, CFO, VENU
The Grassi SEC & Capital Markets team is available to guide you through every step of your Initial Public Offering journey. Contact us today to learn how we can support your path to going public.
