Startup Boards, 2nd Edition

Chapter 27Going Public

If your company is a huge success and the market allows it, you may be able to take your company public in an initial public offering (IPO). As you march toward an IPO, board responsibilities take on another level of formality. The level of work increases, the presence of lawyers playing an active role is noticeable, and committee work shifts from informal to formal.

While this is an exciting time for a company, the transition from a private company to a public one is serious. As you gear up to go public, there are some specific things that directors should do, and pay attention to.

Process

The process of going public is complex and can take up to a year. In the United States, the Securities and Exchange Commission (SEC) governs this process. Most major law firms have a group dedicated to helping companies through an IPO process.

There are books about the details of the process (many law firms have written books, or at least long marketing documents, about the IPO process). However, the rules are constantly changing. As an entrepreneur, you're fortunate to have lawyers, accountants, and investment bankers who make a living helping companies go public. Use them.

Committees

For private companies, especially early on, the entire board often takes on the functions of individual committees. However, as the company and the board get larger and more mature, creating a formal committee structure makes sense.

As you begin the process of becoming a public company, ...