Each company that goes public will experience a different path as they strive to raise capital and gain interest. Still, there are typical processes and patterns that tend to occur regardless of industry. Understanding the average timeline of an IPO is important for business owners and stockholders to make the best financial decisions as they take on the process of going public.
Preparation
Before going public, companies should expect the preparation process to take between six and nine months, however it could take longer if the process is not managed properly. There are four key steps involved in the preparation process: the registration statement, the financial audit, the SEC review, and the stock exchange review. Preparing the registration statement can be tedious work, but it is absolutely essential that those composing the document pay attention to details. All documents, records, and financial books must be reviewed before the statement can be drafted. Companies should then expect the financial audit to take the most time; this process can take anywhere from 30 to 120 days as the company’s financial records are evaluated.
The SEC will then review the registration statement and return with comments after about 30 days, but the overall review process can occur over 60 to 120 days depending on the circumstances of the business.
Similarly, the stock exchange review process can take some time, but it can also take as little as two weeks. Each stock exchange has different criteria that it assesses, but in general, this review will take into account things like existing stockholders, stockholder relationships, and capital invested.
Things to Consider
There are some factors beyond the control of company leaders, but taking steps to minimize the amount of time that is spent on this process can help accelerate it. Hiring professionals who are knowledgeable, reliable, and experienced to assist with the compilation of essential documents, review scheduling, and overall organization will keep your mistakes to a minimum. Additionally, keeping your company’s records in a safe, well-organized place to begin with will help you when you need to conduct the financial audit and compose the registration statement. When looking to take your company public, doing what you can as early as possible will alleviate unnecessary stress and promote efficiency in the process.