Prepping finance for the IPO—and beyond

The IPO landscape has become much like a game of red light, green light: Stop, and go, stop, and go.

Before large public offerings like SpaceX, and with Anthropic and OpenAI on the horizon, many prospective public companies were in “the wait game,” Armanino finance and accounting advisory partner Wendy Beck told CFO Brew.

But since SpaceX’s blockbuster IPO and the June S-1 filings of Anthropic and OpenAI, “more companies are starting to speed up the process,” Beck said. “More companies are talking about, you know, ‘What do I need to do? How can I best prepare? What are some of the priority items I need to think about?’”

The right CFO. Does the CFO (you?) have the expertise to take the company public? That’s “typically one of the largest gaps with a company going public is having a CFO who’s gone through that process before,” Beck said. CFOs who “haven’t gone through that process, unfortunately” can underestimate “the level of effort it takes.”

There are CFOs who “do a great job in a private company atmosphere,” Beck explained. “There are CFOs that take companies through [a] public transaction, and then there are CFOs who are fantastic public company CFOs. All talents are valuable, but their expertises are a little bit different.”

Shape up. One of the most challenging parts of the process can often be preparing the initial public registration document, or S-1. Those filings are “always going to be a challenge, because there’s long nights, a lot of addressing SEC comments, getting through PCAOB audits,” Beck said.

But just as important is looking ahead to the requirements of being a public company. Think a US president’s first 100 days are an important benchmark? The “first 100 days post going public are so very important,” Beck said. “When you become public and you have to start reporting, you have to start off on a good foot and not be late. And there’s a lot of work that goes into that,” she said.

“Some of the Band-Aids, paper clips, duct tape that you had in place during the going [to] IPO process, you have to very quickly start addressing, making sure that you have the support and laying out a plan to get that done,” Beck said.

For example, “getting a more robust accounting staff,” she said. Additionally, it’s key to evaluate the company’s ERP systems. Previously, the company “may have relied on a QuickBooks or something similar,” but now it has to focus on scaling and growing with its ERP.

Having to report to the Street means other demands on the finance function: “A lot of private companies don’t have an FP&A function. They haven’t been doing steady budget forecasting and looking at KPIs and benchmarking to peer groups, and they’ll have to start doing that,” Beck said.

Getting help. If the company needs assistance with any of the above, Beck recommends doing so early on. “It’s expensive to get outside help. I mean, the bills run up very, very quickly, and the longer you wait for that, the more robust it is because you have to bring in more people under really tight timelines,” she said.

“So appreciating the level of effort, appreciating the time that it takes, and knowing what you know and understanding what you don’t know and where you need to get that assistance, I think is really key.”