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SOXHUB accelerates your IPO readiness with greater visibility, version control, and control environment development.

You need automation and efficiency because there’s a significant cost related to implementing as a publicly-traded company… using AuditBoard to speak in a common language [about controls] turned out to be an ancillary, unexpected benefit.

Brian Madonia

SVP and Head of Internal Audit

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3 Benefits of Being SOX Ready Before Going Public

Risk

SOX compliance sets a precedent to assess risk and establish risk tolerance, which drives the nature, timing, and extent of compliance.

Scalable

Establishing an effective strategy and implementing the right technology before going public can help companies develop a long-term program to support sustainable SOX compliance.

Deficiencies

Proper planning and implementation of a SOX program prior to an IPO can reduce the number and types of deficiencies and material weaknesses that a newly public company may be exposed to.

What Is the Pre-IPO Stage?

A pre-initial public offering, or pre-IPO, is a late-stage period for a private company to raise additional capital by selling shares of stock to the public in advance of its listing on a public exchange. While a private company can raise capital from venture capitalists, private investors, or bank loans, this can be expensive. By going public, companies can secure better terms from lenders. Due to the size of the investments being made and the risks involved, the buyers in a pre-IPO placement usually get a discount from the price stated in the prospective for the IPO.

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Who Needs a Pre-IPO Stage?

Any private company that intends to go public will start as a pre-IPO. Going public is a challenging, time-consuming process, so companies need this stage to prepare for all of the requirements associated with being a public company. One of the more significant requirements for a public company is SOX compliance, though the level of compliance required varies depending upon company size and stage of growth. In recent years, there has been an increase in the use of special purpose acquisition companies (SPACs) to expedite the IPO process. An SPAC raises money through the IPO with a primary goal of acquiring other companies.

What Is the Purpose of a Pre-IPO Stage?

The pre-IPO stage is the critical 12- to 24-month period prior to going public when a company readies itself for their IPO. The pre-IPO stage can be broken down into four phases: 1) strategic considerations and IPO planning, 12-24 months prior to IPO; 2) IPO preparation, 6-12 months prior to IPO; 3) IPO transactions, 1-6 months prior to IPO; and 4) publicly listed, post-IPO. There are several key considerations during the pre-IPO stage, including IT systems, internal controls and processes, business and legal matters, and preparing an effective executive team.

How Can I Manage Pre-IPO Readiness with AuditBoard?

Every day, forward-looking companies like Uber, Airbnb, and Chewy are trusting AuditBoard to build the foundation of their control programs on from the very start. AuditBoard helps pre-IPO companies and their IPO partners enable automation to reduce costs, establish a common control language, quickly expand controls implementation, and establish control ownership, as well as provide management confidence that controls are operating effectively and oversight into issues and remediation efforts.

Resources

Pre-IPO Resources

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