Lessons on the IPO journey from the real world

August 16, 2022

Part II: Initial public offering (IPO) and Sarbanes-Oxley (SOX) readiness

A blog post by Beth Kaplan, managing director, Deloitte & Touche LLP and Katie Glynn, senior manager, Deloitte & Touche LLP

While there are many possible challenges for an organization on the IPO journey, realizing a refreshed and modernized SOX program can help to mitigate some of these common challenges. Moreover, leveraging the primary drivers of an enhanced program around your organization’s future-state vision and business needs can elevate a compliance program to deliver maximum organizational benefit in the sustainment phase of going public.

Levers of SOX modernization

The primary levers of SOX modernization can be broken down into an organization’s operating models, programs, and technology. Focusing on these three crucial and interconnected areas is a formula to creating a SOX program that works now and in the future.

• Operating models: Leveraging different operating models, including the in-house model, traditional model, and managed service model, to drive SOX modernization.
• Program enhancements: Identifying and integrating opportunities for modernization, such as challenging risk, transformation by redesign, deploying continuous monitoring and reporting in real time, and developing new enterprise platforms.
• Technology and automation: Integrating technology and automation tools such as analytics, data, and workflow automation.

Steps to help you optimize your SOX program

There are three phases to our approach for developing a more modernized SOX program and a three-step process within each of these phases—alignment, development, and implementation. Starting with a new operating model, a risk assessment focusing on the highest risk areas and adopting the appropriate automation tools informs the process to help you elevate your SOX program.

While there are many possible challenges for an organization on the IPO journey, knowing what to expect may help professionals develop an IPO plan that can help mitigate challenges during IPO. That preparedness, along with the steps to elevate a modernized SOX program, may enable a more efficient, compliant, and resilient sustainment phase long into the future.

Continue exploring this journey and listen to professionals that have gone through the IPO process about their experiences with going public and some lessons learned with SOX compliance in our Dbriefs webcast: Hear from your peers: Considerations for IPO & SOX readiness.

July 19, 2022

Part I: Getting ready for initial public offering (IPO) and Sarbanes-Oxley (SOX) challenges

A blog post by Katie Glynn, senior manager, Deloitte & Touche LLP

Last year has marked the most IPOs filed in recent history.¹ Fueled by the popularity of special purpose acquisition companies (SPACs), there were more than 1,000 new listings, of which 73% were listed on Nasdaq.² For companies going through the IPO process, questions and challenges may arise that can be answered with real-world market experience and insights from others who have gone through successful IPO journeys. To gain insights about likely challenges and strategies to navigate going public, including sustainment, public company financial reporting, and internal control requirements, we invited finance and accounting professionals to discuss lessons they have learned about IPO and SOX readiness. Expectations from organizations going through a public offering varied, but the insights discovered often followed a similar path. So, what can organizations do to prepare for the IPO and sustain their organizations through going public? Here are some considerations for finance and accounting professionals preparing to embark on the journey to IPO.

The phases for going public

Before going public, the evaluation and assessment phases involve assessing current resources and infrastructure, ensuring the involvement of key stakeholders, and building out a road map and plan for execution. The execution phase includes preparing Form S-1 or S-4 (if you are a SPAC) and further preparations for SOX and other future reporting requirements. Once you file statements with the SEC, the maintenance phase and sustainment challenges begin.

Going public is the tip of the iceberg—the sustainment is what lies beneath the surface. For organizations preparing for their IPOs, the challenges during the preparation and execution phases often pale in comparison to the complexities that follow going public—the sustainment phase. This phase may be the most challenging when considering the added complexities of SOX compliance, infrastructure, resources, and transformation.

The sustainment phase of IPO

Sustaining a public company requires a shift in mindset for the entire organization. For starters, the SEC reporting infrastructure will be new and have a cascading effect throughout the organization’s framework. Internal audit and SOX compliance will require new accounting and finance resources. In addition, compliance and adoption of new accounting standards will impact information technology (IT), processes, documentation, and transformation. Going public will also require new governance, such as a board and committee structure, and investor relations responsible for crafting the organization’s messaging to the public.

Boiling sustainment down to one key takeaway: The sustainment phase of going public will drive a necessary optimization of the people, processes, and technology of the entire company.

¹Phil Mackintosh, “A record year for IPOs in 2021,” Nasdaq, January 13, 2022.
²Ibid.