Planning for the IPO Transition

The IPO is a major transition for the company, because it significantly impacts three constituencies -- shareholders, employees and board.

Below are some suggestions for handling the three transitions:

Shareholders:  transition from private shareholders to public shareholders.
1) New public shareholders
     - Before the IPO road show, get to know each other.  The best investor due diligence is watching a company over time.
     - At the IPO, select right new public shareholder base with the right allocations and pricing.
     - After the IPO, continue to earn the public shareholders' support on a quarterly and long term basis.  Key factors are (i) the "consensus estimates," which becomes the street's financial plan for the company, and (ii) the company's strategic positioning, which impacts the company's long-term value.
2) Existing private shareholders.  Manage the overhang.
3) Develop a long term IR strategy to manage all shareholder needs.

Employees:  transition from equity/going public incentives to public company compensation.
1) Prior to the IPO, recruit new employees
2) Prior to the IPO, lock up existing employees
3) After the IPO, implement a public company compensation strategy.

Governance:  Transition from private company to public company compliance.
1) Implement public company finance, such as systems, processes, controls, reporting and risk management.
2) Implement public company board compliance, such as "independent" board members, active committees and many experts.


To help ease the transition, many companies take advantage of the new SEC rules (eg, JOBS act), which allow a slower phased transition to becoming a public company rather than a quick abrupt one.