From red herrings to roadshows, tombstones to green shoes, IPOs can feel like you're trudging through a parallel universe with a strange vocabulary and even stranger sense of time. While you're knee-deep in the process, some days feel like they come and go before you even finish your first cup of coffee. Others, however, plod along at glacial speeds and can be about as fun as death by 1000 paper cuts.
Your financial comrades here at Embark feel your pain. While we could sugarcoat it and say your IPO will be smooth as silk, you already know that wouldn’t be fair or accurate. That isn’t to say, of course, that your IPO must be a laborious and suffocating process. Quite the contrary, if you take a well-organized approach and establish a definitive deadline that uses your IPO effective date as the center of its proverbial solar system, there's absolutely no reason why simple IPO deadlines should make you lose any sleep.
To that point, like most of the decisions involved in the process, your IPO effective date requires thought and attention. A rung bell can't be unrung, so take the following guidelines for different IPO effective dates into account and choose the most feasible and appropriate for your own particular organization.
Ringing the Bell in 2017
Time isn’t your BFF. Your first 10-K must be filed by March 31, 2018. Start brewing the coffee now because you are going to need it. Fortunately, with a Non-Accelerated filer status, no SOX opinion is required.
Your second 10-K must be filed by March 1, 2019. You will likely be a Large Accelerated filer so a SOX opinion will be required. Furthermore, a full implementation of ASC 606 is also a necessity. Once again, keep the coffee brewing.
Ringing the Bell in 2018
Your first 10-K must be filed by March 31, 2019. No SOX opinion is required as you will be a Non-Accelerated filer this year but you will have to fully implement ASC 606.
Your second 10-K must be filed by March 1, 2020. Since you likely be a Large Accelerated filer, you'll have an entire additional year to become SOX compliant. Feel free to mix some decaf into your routine.
Ringing the Bell in 2019
Your first 10-K doesn't need to be filed until March 31, 2020. No SOX opinion is required since you will be a Non-Accelerated filer this first year. This also allows you to delay the implementation of ASC 606 by a full year.
Your second 10-K will need to be filed by March 1, 2021. Again, you'll likely be a Large Accelerated filer so you will have an additional year to become SOX compliant.
When going public, the decision of when to go effective isn’t usually left up to the accounting team, or even the CFO. That’s why it’s important to have these effective dates readily available so you can be prepared to provide input when that decision is made. Plan ahead, leave yourself room for any unforeseen situations, and enjoy the process as much as possible since your IPO will inevitably be a momentous event in your organization’s lifespan.
