The volume of U.S. initial public offering (IPO) activity is increasing, raising a big question for finance and accounting managers at private companies contemplating an IPO: Are we ready?
If the answer is "no," the question becomes: How can we get ready? If the answer is "yes," the question becomes: How can we be sure? Fortunately, a new resource provides answers to both of these questions.
First quarter 2011 U.S. IPO proceeds hit $12.4 billion, the highest first quarterly value since 2008 and a 194 percent increase over IPO proceeds in first quarter 2010, according to PricewaterhouseCoopers. In fact, take away Visa's massive $17.8 billion IPO in first quarter 2008, and the 2011 first quarter IPO proceeds rank as the highest since 2000.
"This is one of the best first quarters we've seen in years ... Based on the first quarter results and insights into the deal pipeline, we are optimistic that the momentum will continue for the remainder of the year and potential issuers will look to capitalize on the rebounding IPO market," reports Henri Leveque, Partner and leader of PwC's Accounting Advisory practice.
Although the IPO market has returned, its nature is different than the IPO market of the early 2000s. And one of the biggest risks appears to be lack of readiness. "A variety of forces have transformed the nature of this market in the past decade," note the authors of a new Public Company Readiness (PCR) guide from Protiviti. "These changes complicate the IPO and public debt offering processes, while making it more important than ever for pre-public companies to achieve a confident state of public company readiness."
This comprehensive guide takes the form of frequently asked questions (FAQs), 89 of them to be exact. The questions are arranged into several different sections, including an overview of the readiness process, financial reporting and financial close requirements, SOX-compliance requirements, corporate governance issues, risk management consideration, IT requirements and more.
The guide begins by addressing important aspects of the readiness process, including how long it typically takes, major milestones within the process, how the nature of public company requirements has changed in recent years, and the cost of taking a company public (and operating as a public company vs. remaining a private company).