5 considerations prior to going public


Despite recent turbulence in the public markets, the draw to go public remains strong. Especially in an economy with rising interest rates, accessing private capital or debt can be a challenging and long-drawn-out process. The public market promises cheaper access to capital, and the liquidity of the stock offers strong growth opportunities, both organic and inorganic.

It is important to remember that the path to accessing the capital markets is also complex and time-consuming. It takes a lot of planning, teamwork, project management, and execution, from a cross-functional group of both internal and external parties. But for high-growth companies that are attractive to investors and willing to make the investment, the journey to public company readiness may be worth it.

Here are five key factors and components to consider.

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  1. Your best path to the public markets

    Companies go public for a variety of reasons, and these reasons should be used to determine which path to the public markets might suit the company best: A traditional initial public offering (IPO), a SPAC (special purpose acquisition company) merger, or through a direct listing.

    • The traditional IPO is still the way to go for mature and profitable companies looking to raise capital to continue their growth trajectory.
    • Direct listing may be beneficial for companies that are not looking for capital infusion, but rather looking at the listing as a liquidity event for existing shareholders.
    • The more recent vogue, the SPAC merger, is also best suited for companies looking for a capital raise through a private investment in public equity (PIPE). Given the lack of success of some recent SPAC mergers, however, companies continue to face strong headwinds in raising PIPE.

  2. Governance

    Companies seeking to go public may need to decide early as to the stock exchange where they plan on listing. While there are similarities between the NASDAQ and the NYSE, there are some key differences that companies need to understand and consider when making their listing choices. While it is best practice to have an internal audit/risk management function, given the Sarbanes-Oxley requirements, the NASDAQ capital markets does not mandate companies to have an internal audit function, unlike under NYSE, where it is a mandated requirement. The NASDAQ also provides for certain exceptions related to corporate governance guidelines, disclosure of basis of independent director determination, and posting of various committee charters on the company’s website.

  3. Finance, accounting, and reporting

    One of the biggest lifts in the transition journey is the step up from private company audit to the Public Company Accounting Oversight Board (PCAOB) audit, which is required for companies seeking access to the U.S. capital markets. U.S. generally accepted accounting principles (GAAP), International Financial Reporting Standards (IFRS), and SEC reporting can be complex, dynamic, and time-consuming. Formal accounting position papers to memorialize accounting conclusions may be required to meet the public company reporting requirements, along with updated financial statements and disclosures. Companies should likely consider augmenting their in-house resources with external specialists.

    To encourage more companies to access the capital markets, the SEC allows the option of filing as an emerging growth company (EGC), a status that provides certain relief from the standard set of reporting requirements, assuming the company meets certain criteria. One of the benefits of filing as an EGC is that newly listed public companies can make a policy election to adopt new accounting standards at the timeline prescribed for private entities. However, it is important to make adequate disclosures regarding the deferred election in the registration statements. An EGC can also file confidentially with one year’s worth of financials for the initial review in certain limited circumstances, to be updated with the subsequent year’s audited financial statements and any stub periods prior to the public filing of the registration statements. EGCs are also only required to file audited financial statements for two years, as opposed to three years for non-EGCs. Companies interested in ECG status should consult SEC specialists and general counsel to make certain that they are making the right interpretations of the rules.

  4. Finance and information technology (IT)

    Life as a public company requires timely and accurate reporting. There are strict deadlines for filing the financial statements and other material events, and when those deadlines are not met, cease trading or delisting could occur. To withstand the rigors of the reporting requirements, companies need to optimize and harmonize their operating model, consisting of people, process, technology, and data.

    • People uplift could include adding internal or external expertise across SEC reporting, U.S. GAAP, financial planning and analysis (FP&A), corporate taxes, and investor reporting.
    • Technology stack optimization would need to consider current and future growth, including zeroing on the enterprise resource planning (ERP) system, close automation packages, FP&A solutions, and SEC reporting tools.
    • IT infrastructure optimization requires review of IT operations spanning from software development life cycle (SDLC), change management, logical access, vendor management, and job operations to business continuity planning and disaster recovery (BCP & DR).

    All these need to be considered holistically. Performing an end-to-end finance assessment with technology and IT operations components would go a long way in understanding the current state and developing an optimization implementation road map.

  5. Compliance

    Public companies are responsible for a multitude of reporting requirements. Beyond the demands of their board members, committees, and charters, there are various other current and evolving compliance requirements. Public companies need to comply with Sarbanes-Oxley regulations, requiring an assessment of the effectiveness of the internal controls over financial reporting; in some cases, certain companies may also require an auditor’s attestation of their internal controls based on their revenues and public float. Requirements related to cybersecurity risk management, strategy, and governancecontinue to evolve, and a draft version of SEC reporting requirements related to environmental, social, and governance (ESG) concerns is imminent. These could very well become effective soon, either in current or a modified state. Companies need to get ahead of the curve by performing a comprehensive assessment of the various reporting requirements to evaluate their timetable for compliance. This in turn could assist in laying out their road map for transition from private to public.


While there are many benefits to being a public company, it comes with enormous responsibilities. The key is to develop systems, processes, and controls that can effectively assist in identifying material transactions, supporting proper recording and disclosures to facilitate timely and accurate reporting. The tone needs to start at the top – everyone from the board to the C-suite to the rank and file needs to understand the duties, responsibilities, challenges, and ramifications for non-compliance with reporting requirements. In summary, a successful listing to the capital markets is not an end, but a means to an end, and the journey only continues from there.


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Swami Venkat

Swami Venkat

CPA, CISA, CFE, ACA, Partner, CFO Advisory Leader

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This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.