An initial public offering, or an IPO, undeniably poses both an opportunity and a challenge for a company.
According to Controllers Council, with changes in the political climate and interest rates, opportunities can open as quickly as they close.
While an IPO provides an infusion of capital, it’s not without its drawbacks, as finances will be analysed thoroughly and reporting will be adjusted. What's more, controls and processes will be picked apart in search for weaknesses.
As a financial controller, one needs to know what to expect in the accounting department to make it as stress-free as possible and prepare the organisation to go public.
The Preparation
In preparation for an IPO, financial controllers must brush up on what’s involved, who the players are, and which pitfalls can derail the team, as this is not an overnight project, being immersed in processes and procedures for 18 to 24 months.
IPOs can be grueling with new demands on top of one's day-to-day obligations, with the management, external auditors, and staff all wanting something.
This is why assessment of the process is important to be able to routinise them. Such processes include:
• SOX internal controls
• Month-end close
• Statutory reporting
The sooner one can start acting like the accounting department of a public company, the easier the IPO hill will be to climb
The Drafting
Drafting the accounting players for the team, which will span from executives to more functional inhouse players, and including needed external experts and specialists, the composition and onboard timing around the IPO lineup is key.
For controllers and their staff, a great team is critical and its importance to the IPO process cannot be understated.
Even one member, internal or external, who does not pull their weight can negatively influence the entire endeavour. That is why financial controllers must ensure the staff has the structure and support to ensure consistency.
It is necessary that financial controllers take a look on what resources the team uses:
• How efficient are they?
• Do we need to replace anything?
• How can these resources support our processes pre, during, and post-IPO?
• What is our window to make these decisions?
The reality is that financial controllers are the functional jack of all trades, handling budgets, forecasts, entries, policies, billing, and risk mitigation. The IPO process is the end of the company’s private journey and the beginning of a new one as a public company.
Reaching this milestone is no small task, with tighter deadlines and higher expectations. It is important then to remember to maintain some balance.
Remember that the IPO is a one-time event, with the rest of the company’s history yet to play out. Financial controllers must approach it both thoughtfully and methodically.
