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Are there any corp. governance resources for making the transition from private to public, like compliance checklists?

Answers

Topic Expert
Rex Jackson
Title: EVP and Chief Financial Officer
Company: JDS Uniphase
(EVP and Chief Financial Officer, JDS Uniphase) |

There are any number of checklists and other materials readily available on line. I would try a number of different key word searches and then focus on the ones from reputable law firms, many of whom make these available for marketing purposes.

If your company is truly in the planning phases of going public, however, I would highly recommend you engage directly with your existing outside counsel on this topic. If your outside counsel is not a higher tier firm that does IPOs regularly, then I'd further recommend you reach out to such a firm to begin a relationship. In either case, the firm(s) should be willing to give you some quick, crisp guidance at minimal to no cost as a way to build a relationship with a company with a future.

Topic Expert
Brenda Morris
Title: Board of Directors, Audit Committee Chai..
Company: Boot Barn
(Board of Directors, Audit Committee Chair, Boot Barn) |

My favorite resource is a handbook called "The Public Company Handbook". I have used it the past several years in an IPO and a couple of follow-on offerings. It is a great, straight forward resource. Written by Perkins Coie, published by Bowne. This is an inexpensive way of assessing your IPO readiness prior to engaging your law firm. Good luck!

Topic Expert
Barrett Peterson
Title: Senior Manager, Actg Stnds & Analysis
Company: TTX
(Senior Manager, Actg Stnds & Analysis, TTX) |

Rex and Brenda have made very good suggestions. Legal counsel will be important and should help, as ashould your Public Accounting Firm. Principal compliance ares are State "Blue Sky" [securities] laws, SEC compliance for which you can also search SEC.gov, and stock exchange requirements for the exchange you are considering, available on their websites.

Topic Expert
Sunil Thukral
Title: Controller/Technical Accounting Advisory..
Company: Consultant
(Controller/Technical Accounting Advisory/ SEC Reporting, Consultant) |

In addition to the above excellent suggestions, I will also recommend you to focus on ensuring the compliance with the accounting rules (i.e. U.S. GAAP).

As long as the company is private, all the financial numbers are not under detailed scrutiny. However, as soon as the company converts to becomes a public company, there will be a lot of detailed scrutiny of the financial information, including the off-balance sheet numbers, by the auditors, investors, bankers, SEC, general public, etc. Also you will need to ensure that you have sufficient controls in place so that you are able to report the accounting numbers on a consistent and on a timely basis. This will ensure meeting the filing requirements and also protect your company from any future "reputation risk".

To ensure accounting compliance, I will suggest you the basic rule of the thumb - "Documentation, Documentation, Documentation". When you transition to become a public company, you will be making some accounting policy choices or even potentially changing the accounting, make sure you document this in the various white papers you write and maintain, making appropriate references to the FASB codification as appropriate. Doing all this documentation might seem burdensome to you, but, maintaining these white-papers will be a life-saver for you, just in case you receive a comment letter from the SEC anytime in the future OR if the auditors challenge your judgement.

To ensure U.S. GAAP compliance, suggest using the checklist that is provided by your auditors (by the way if you complete it yourself, you can potentially decrease your audit fees).

For writing the white papers, suggest using an consultant that is unrelated to the external auditors to avoid any potential independence issues. If you plan to write the white-papers yourself, please feel free to contact me and I can provide you with some sample white-papers that I have written and some other useful resources to ensure compliance with the accounting rules.

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