When my 11-year-old daughter peppered me with Facebook IPO questions after hearing a radio bit on the topic, my Facebook-IPO mental reservoir reached its capacity. The whole endeavor featured too much hype and too little information.

While that sort of hype/information ratio can bode well for the company conducting the initial public offering, it's not much help for the rest of us, including finance and risk executives tasked with preparing their private companies for an IPO.

Business pundits are weighing in this week with opinions of what Facebook did wrong, and right; however, precious few of these insights address more fundamental public company readiness (PCR) pitfalls and practices.

Here are three common mistakes made leading up to an IPO, according to Protiviti:

  • "Failure to assemble the right team to help take the organization public." Deep knowledge of the business -- including back-office and infrastructure issues (e.g., will our current ERP system continue to serve us well once we're public?) -- as well as past IPO experience should be represented on the team.

  • "Underestimating the level of effort required." The effort is intense and can be lengthy (12-18 months). What's more, employees must continue to excel at their full-time jobs while conducting a readiness effort that rivals a major change initiative in scope and disruption.

  • "Failure to fully develop sound business processes and infrastructure, particularly those that support financial reporting processes." Private companies often do not possess the discipline around reporting processes that public companies require. As a result, financial statements may not be able to withstand the scrutiny of the U.S. Securities and Exchange Commission (SEC).

Time will tell whether and/or to what extent Facebook committed any of these mis-steps. If you are interested in avoiding them during your own readiness efforts, avoid the hype and get a hold of some practical guidance, like this 89-question guide on PCR.

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