The IPO Preparation Process

0:00:04.0 Chris Dohrmann: Welcome to Prosperity at Work from JP Morgan Workplace Solutions. I’m Chris Dohrmann. In this episode, my colleague John Bagdonas is joined by Joe Notaro from our partner Forvis Mazars. Together they’ll be taking an in depth look at IPO preparation process, financial reporting, equity compensation, internal control roadmaps and more. Any company that is preparing for an initial public offering will know there is a lot involved and hopefully today we can demystify some of the process for you.

0:00:34.1 John Bagdonas: I’m John Bagdonas, VP of business development for JP Morgan Workplace Solutions. And I’m delighted to be joined here today by Joe Notaro, Accounting Advisory Partner with Forvis Mazars. Hi Joe, thanks for joining us today. To start with, why don’t you tell us a little bit about Forvis Mazars and your role as an advisory partner.

0:00:54.2 Joe Notaro: Yeah, thanks John, really appreciate you having me. As John mentioned, I’m Joe Notaro and I’m an Accounting Advisory Services partner at Forvis Mazars and I’m based in the firm’s New York office. For those of you who haven’t come across the firm yet, we’ve had a busy couple of years. Three years ago, Forvis was created as a result of a merger of equals between two top firms here in the US. Not to stop there, last June, Forvis and Mazars combined, not only here in the US but we created a new leading global professional services network operating under a single global brand. So now to merger as the US firm is still separate from the international firm. But we believe it will allow us to drive collaboration and coordination across the firms to better serve our clients with international needs and be ready to grow with our clients that may have those international needs one day. As we approach the one year mark, we’re now the 8th largest accounting firm in the US and the 10th largest internationally with over 5 billion in revenues. We offer a full suite of solutions to our clients ranging from audits to taxes, system implementations, valuations and consulting services.

0:02:02.5 Joe Notaro: As I mentioned, I’m part of the accounting advisory services team. What we do is we’re the group at Forvis Mazars that helps with the complex technical accounting and SEC reporting issues. We specialize in business combinations, carve outs, debt and equity financing transactions, revenue recognition, lease accounting and stock based compensation matters. We also help companies with their SEC reporting complexities and have a lot of experience navigating the IPO process from start to finish.

0:02:31.7 John Bagdonas: Thanks Joe for the overview. And so getting to the topic at hand as we can all appreciate, an initial public offering is a hugely transformative event for any company going through one. I like to think of it in many regards as an exciting once in a lifetime event crammed full of twists and turns in many moving parts. And that’s why we’re so fortunate to have you to guide us down what I like to call the yellow brick road of capital markets towards the IPO Emerald City. Speaking of capital markets though, why don’t you share some of your insights and also explain the different liquidity paths that a company may take, such as an IPO, SPAC or reverse merger?

0:03:12.9 Joe Notaro: Yeah, and I think that’s a good segue to what we’re going to talk about today. So just as a reminder, we’re going to be navigating the IPO process specifically around financial reporting and internal controls. The webinar is really going to be geared towards companies that are thinking about going public and what you need to consider when you’re two years out, 18 months out, 12, six and so on, all the way to your initial public offering and beyond. We’re going to cover the key considerations companies should consider when preparing for an internal public office and provide an overview of the process, share some insight from experts who have navigated the challenges before, and also talked about some of the lessons learned from companies who tried to navigate the process without the proper resources and expertise in the room. The biggest takeaway you should take from this webinar is regardless of where you are in the process, no, you’re not too early to start thinking about these things. And as John teamed me up, I always like to start out with an update on where the capital markets are right now. First, a little bit of a history lesson.

0:04:18.3 Joe Notaro: So in 2021 there were 416 traditional IPOs raising $155.8 billion. A year later, this followed up with 90 traditional IPOs raising $8.6 billion. And really, since then, companies have been waiting to see when the window was going to open again. This was due to a variety of reasons. Interest rates were too high, recession was imminent, inflation’s out of control, geopolitical tensions led to investor uncertainty, and so on. And speaking of uncertainty, most investors preferred to wait and see until the results of the US Election played itself out last November. Despite all these factors, 2024 saw a notable increase in activity. In 2024, the number of IPOs was actually in line with the combined total number of IPOs in ’22 and ’23. While some viewed this as still a soft market, as it wasn’t in line with some early expectations or the historical levels of activity, we did see some encouraging trends. We saw an uptick in sponsor backed IPOs, but also an impressive return of 42% of sponsor backed IPOs after going public. We also saw an increase in venture capital backed IPOs to the tune of nearly twice as much of a raise in ’24 compared to ’23 and nearly four times as much of a raise compared to 2022.

0:05:42.6 Joe Notaro: It was very industry specific with healthcare and technology making up 61% of the deals and 49% of the proceeds. So flash forward to 2025. There is a reason to be optimistic. In addition to the solid aftermarket performance and a solid start to the year, the election is now behind us and the general consensus is there’s a pro business sentiment taking over with anticipated policy changes and favorable market conditions. With all these factors, there may be a reason to be positive that the IPO market will bounce back in 2025 and continue to be strong in 2026. We’re also seeing a growing backlog at companies that want to go public. For example, there have been companies who’ve been waiting for market conditions to improve, but been ready to go the last two years. Meanwhile, there are a lot of companies who are just starting to think about going public, realizing realistically that they’re still 18 to 24 months out.

0:06:41.4 Joe Notaro: First, although we are referring most of the time to the initial public offering, I wanted to highlight that there are multiple ways for a company to enter the capital markets, so some basics. In an IPO, the company is going to work with a team of underwriters to determine the offering price, file necessary documents with the regulatory bodies like the SEC in the US and market the shares to potential investors.

0:07:07.1 Joe Notaro: Another way companies could go public is completing a reverse merger with a Special Purpose Acquisition Company or a SPAC. A SPAC is a blank check company created solely to raise capital through an IPO for the purposes of acquiring an existing private company. A SPAC will raise funds through an IPO and then have 18 to 24 months to identify and merge with a private target company. The advantage is, because the SPAC is already public and filing 10Ks and 10Qs, theoretically it could be a faster avenue to go public for the private company and potentially less expensive.

0:07:44.7 Joe Notaro: A few years ago we saw a boom in SPACs. If you recall, it seemed like everyone had one. However, the last few years we’ve seen the levels come down to earth or return to normal historic levels. But then in 2024 there were 50 SPAC IPOs raising $7.6 billion, which was more than double compared to the prior year. So there are opportunities out there and it remains an avenue to go public. But it has been harder and harder for companies to get over the finish line, so to speak, due to increased execution risks, stricter SEC regulations and an overall decrease investor risk appetite for SPACs.

0:08:24.2 Joe Notaro: Lastly, a private company could go public by completing a reverse merger into a publicly traded shell company, so not with a SPAC vehicle. In this case, the publicly traded shell company is already public and then the private company shareholders receive a majority of the shares in the public entity. The advantages here is that it may be faster and less expensive to become public, but typically, the process may not raise as much capital as an IPO. Also, much like a SPAC, there could be business combination disclosure implications as well as the need to be compliant with internal controls much quicker. But in summary, any of these options is going to be time consuming and costly. There are also a lot of complexities involved, so you can never have too many experts to help you navigate the process. And like we tell our clients, no, it is not too early to start thinking about what you need to do. We’re going to move on into an IPO preparation timeline.

0:09:22.4 Joe Notaro: So two years to 18 months out, we’re going to emphasize best practices for going public. And really it’s geared to what stage and how far away you are from your IPO date. To be clear… And there are companies who decide to go public and get their six months later. Absolutely. Are they going to be able to do all the best practices listed here? Absolutely not. There just isn’t going to be enough time. Plus some of this stuff may need to be done after you go public. The last thing you want to do is cut your celebration short to implement a new ERP or address a handful of material weaknesses that your external auditor identified during the process. That is why we recommend you start the process as early as possible.

0:10:10.7 Joe Notaro: Setting aside 18 to 24 months is our recommendation and we’re going to explain why. So the first step on the slide should be self explanatory, but the company needs to ask itself why. Why do they want to be a public company? Is going public for you or is there an alternative to achieving your goals? I personally have spent a good chunk of my career in the life sciences space and drug discovery is expensive. Maybe venture capital funding got you into the lab and through preclinical trials or maybe even to phase two or phase three. But to get to the next phase of regulatory approval and have your first commercial launch, a company may need access to public markets to raise additional capital. Or how about an early stage technology company that needs to take its idea to the next level? Or the company that has developed the next generation lithium battery, but needs a capital infusion in order to build the plant to make manufacture the product or to fund additional research to make it last longer or cheaper or maybe to expand into new markets. Whatever the reason is, you need to make the decision internally.

0:11:19.8 Joe Notaro: This is the decision you’ll need to get support from the board and be unified on your timeline. Once you make the decision, you can build your narrative or your story on why your company is valuable. This includes highlighting your growth potential, your competitive advantages and other strengths, and why the only roadblock to achieving your vision is getting more capital. This is also a great opportunity to perform what is called an IPO Readiness Gap Assessment. An IPO Readiness Gap Assessment is when an outside firm that has helped companies go public before will come in and conduct interviews at the C-suite level. It really drills down into the company’s processes, systems and people.

0:12:04.1 Joe Notaro: While one of the focuses will be accounting and financial reporting, it covers much more than that. Tailored questions covering your human capital and human resources department, your legal infrastructure, what systems you have in place, what your org chart looks like. Even understanding if your current team has done it before will be covered. The end product will be an in depth report that will go through findings, recommendations and action items designed to help educate the C-suite and the board of the gaps in your company. The volume of action items is going to vary depending on the organization. If you’re a startup trying to go public, your list is probably going to be a lot longer than if you were a company that was public, went private and is going public again, or if you’re a spin out of an existing public company. But if you do this exercise in that 18 month to 24 month out stage of your journey, you’re going to be in good shape because although there’s still a lot of work to be done, you’re going to have time to get through the majority of them.

0:13:07.0 Joe Notaro: At 18 months out, this is really a great opportunity to start the roadmap and use the results of the IPO Readiness Gap Assessment. This is also a good chance to build your team of experts both internally and externally. You’ll notice this slide has quite the list of things to consider, so let’s cover some of them. One of the biggest challenges that companies face is as a private company, you may not have had an external audit requirement. And for those who did, oftentimes, the audit was conducted under AICPA standards and not PCAOB standards. If you think about the registration statement, the SEC has a requirement to include PCAOB audited financial statements.

0:13:50.2 Joe Notaro: So selecting the right external auditor here is going to be critical. Certain firms don’t do PCAOB audits and industry experience and resource constraints is going to be critical in making your selection. Under a PCAOB audit, your auditor is going to be much more limited in the assistance they can provide given the PCAOB Independent standards are going to be much more stringent. There are also going to be enhanced disclosure requirements and greater testing samples that would be need to be performed to support their audit opinion. Selecting your external auditor is a major step, but preparing for the PCAOB audit is just as important. Engaging with experts who know the process, know the industry and have done this before is going to be critical.

0:14:36.4 Joe Notaro: Oftentimes, this can be done by the same team who performed the IPO readiness gap assessment. Their role will vary based on the stage of maturity of your company. Some companies already have a robust accounting team and just need help with reviewing the historical complex transactions and preparing memos and other documentation that the auditors will be able to review. Other companies have been on the cash basis of accounting or maybe have prepared a tax ready trial balance historically and will need some TLC to review historical transactions and prepare for the audit. They may lack account reconciliations or even the resources needed to pull support for the audit.

0:15:18.0 Joe Notaro: Some companies were historically audited, as I mentioned, so there may be a set of financial statements and footnotes out there, but they just need someone to review them for gaps or to lift them up to PCAOB standards. Others may just need a project manager in place to make sure everything stays on track. Point is, here there’s a lot to do and the last thing you want to do is engage an auditor, have them go through planning and schedule a fieldwork start date only to realize you as a company are not ready for them to start.

0:15:49.7 Joe Notaro: This is also a great opportunity to start building your team of external experts, so SEC lawyers. This is going to be critical as well. First, assessing if your current firm has the expertise, the experience and the bandwidth to meet your goals and your timeline is usually a good first step. There are also a lot of great firms out there that specialize in this process and they should be brought in early. SEC counsel, among other things, will help set the project plan. Based on the deal structure and when the company wants to ultimately go public, they will help determine when the company will need the plan to file initially.

0:16:26.4 Joe Notaro: The SEC Council will also confirm your anticipated filing status, which could help determine things like the number of years of PCAOB audited financial statements needed in the registration statement and when management will need to opine on their internal controls. We’ll talk a little bit more about that later. They will also work very closely with the audit readiness experts and the external auditors to ensure everything is staying on track. Speaking of internal controls, another key expert to consider relates to ensuring you are ready from a stocks perspective.

0:17:00.6 Joe Notaro: As a public company, management will need to assess and sign off in your public documents that the company’s internal controls over financial reporting are effective. Under a traditional IPO, the company will be exempt from this in its initial form 10k, but not in the second. All filers are required to comply with this in year two. However, depending on the filing status, management may also need its external auditors to opine on the company’s internal controls over financial reporting as early as the second year. Some companies will be exempt for this for a number of years depending on the filing status, but even before that, regardless of the requirement, getting a head start is going to be critical as there is a lot of documentation requirements and focusing on this could actually make for a smoother external audit process.

0:17:54.0 Joe Notaro: Another expert you’re going to want to identify engaged during this timeframe is your valuation expert. This applies to companies who issue stock based compensation or preferred stock, have lease contracts, or enter into complex transactions such as business combinations or transactions where they could have embedded derivatives. This is especially important for stock options as valuation assumptions need to become more robust and fine tuned as you approach the IPO date.

0:18:24.0 Joe Notaro: Income tax expertise is always important on many levels. From ensuring the transaction itself is accounted for correctly, returns are filed timely, to the income tax provision disclosures, you’re going to want to assess your current levels of expertise and bring in the appropriate experts where needed. A lot of these resources can be handled by third parties, but this is also a good time to start building out your internal team as well. The IPO readiness gap assessment will also cover the people aspect, so you can use that as a good guide. Chances are, you’re going to need more headcount in accounting and finance just by the nature of the tighter deadlines of being a public company. So during that process, a CFO should be identified, one that has the expertise to build the team with the appropriate close SEC reporting, technical accounting, internal audit and FP&A experience.

0:19:20.0 Joe Notaro: Investor relations is another consideration that should start to be identified. We spoke about external legal, but identifying an in-house general counsel for those companies who do not have one in place will also be important. And last but not least, human resources will begin to wear more hats as a public company dealing with stock options and employee benefit plans. There’s just going to be a lot more to build and it’s easier to spread out than do it all at once.

0:19:49.9 Joe Notaro: Another area of focus of the IPO readiness assessment is going to be the systems. There could be certain industry specific enhancements to consider as well, but this is going to be a good time to start thinking about the following. First and foremost, a financial reporting ERP. As an early stage private company, maybe QuickBooks served its purpose. Assessing if it’s time to go live on a new system is always recommended as early on in the process. Same with HR and payroll. You’re going to have more employees, you’re probably going to have stock options. There could be tax implications that you want to track. So making sure you have the right systems in place to meet your needs not only of today, but of tomorrow. And it should come as no surprise but identifying the SEC reporting software so it’s not only going to handle the 10Ks and 10Qs that you’re going to all of a sudden have to be required to file in a timely manner, but also Form 3s and Form 4 disclosures once you go public. A lot of times companies will engage a printer prior to going IPO, which will handle the administrative aspects of the filing. But as a public company, utilizing a software solution is highly recommended. This will help streamline the reporting process and could make the IPO process easier as well.

0:21:10.6 Joe Notaro: The next system we wanted to talk about is the stock based compensation system, which is going to be covered a little bit later by John, but this one is often overlooked because there are system solutions that have become industry standard for private companies. They will work along with the manual cap table to track the outstanding shares and options. However, as a public company, they’re just not going to have the capabilities needed to support you after an IPO based on the sheer increased volume. This is why we recommend focusing on this area as well while there’s still time. So we purposely spent a good amount of time on this slide for a reason. There’s a lot of things that you could be doing to consider even if you are a year or two away from your IPO. This phase of the timeline will include a lot of planning, meeting and selecting vendors and building out your internal team. It will also be a good opportunity to check a lot of the items of the IPO assessment off your list.

0:22:09.5 Joe Notaro: So at the 18 month mark, this is where you’re really going to have to refresh your timeline and work with the board to determine, is this something you really want to do? At this point, we spent a lot of time planning, meeting with vendors, building the team. Now it’s time to get to work, so to speak. As we mentioned before, one of the biggest challenges is with all the other stuff to do, getting through your PCAOB audits so that your auditors will be ready to issue their opinions that will ultimately go into the registration statement. We also discussed, depending on your filing status, you may need two PCAOB audits or you could need three. And I’ll reiterate, while it’s definitely been done before, waiting until the last six months to complete those two or three audits is not recommended. This is why getting your first PCAOB audit out of the way in the year prior to actually going public is what we recommend. This is where your audit readiness, your SOX and your technical accounting team is really going to play a huge part im helping you get through the process.

0:23:12.7 Joe Notaro: How early you start the prep process is really going to depend on what stage your company is in. If you’ve been getting AICPA audits for years or if you were public in the past, it will be a quicker process than if this is your first time being audited altogether. Typically, a first time audit or a change in auditor is just going to take longer. The key here is going to be establishing an auditable opening balance sheet complete with reconciliations, complex historical transactions documented thoroughly. And the same goes for any complex transactions that occurred during the years under audit. You’re also going to want to have documentation around significant accounts like your contracts with customers, leases, and any debt and equity transactions in place to fund your operations.

0:24:02.0 Joe Notaro: Process narratives are also going to be helpful. No matter what audit firm you choose, they’re going to have a need and requirement to gain an understanding of the significant processes within the organization. Having these processes documented and available to your auditors could actually reduce the sample sizes the auditors will need to test. So that’s a good thing. I want to highlight an example. Let’s say you’re a 12/31 year end. Let’s say it’s the summer of 2025 and the board wants to be ready to go public in January or February of 2027. Let’s also assume we’re an emerging growth company filing status, which would mean two years of PCAOB audited financial statements are required to be presented in the registration statement. Ultimately, to go public in that timeframe, you’re going to need PCAOB audits for 2024 and 2025 as well as interim financial statements for the six month interim 2026. That’ll be used in the initial filing and then you’ll need nine month interim 2026 to also go public.

0:25:08.0 Joe Notaro: So our recommendation would be you engage an auditor to complete the 2024 audit under PCAOB standards which can be completed by the end of 2025. Trust me when I tell you, this initial audit is going to be a substantial lift. Having the first one completed so you could focus time and energy on all the other demands that are going to come your way is going to make for a smoother process. Then, if we shift over to the right side of the slide, you could focus on building out the registration statement working team. This is typically going to consist of your CEO, your CFO, other key members of the C-suite, your financial reporting experts, legal and your auditors. This is a critical stage because you can map out the timeline, the roles and responsibilities, set key milestones and hold each other accountable.

0:26:01.8 Joe Notaro: So let’s go back to the example. The Board is still committed to be ready to go public in January or February of 2027. You’ve completed your first PCAOB audit and hopefully between knowing the process and how things worked and your expert team in place, the second time around is going to be a lot smoother. This is because you’ve already prepared the documentation for all the historical transactions. You have a financial statement footnote framework that both management and the auditors are comfortable with. So the hope is, it will be more of an evolutionary update than recreating the wheel. Hopefully by the summer of 2026 you will be in a position to complete your second PCAOB audit and will be in really good shape to shift into the registration statement process.

0:26:50.4 Joe Notaro: For those of you unfamiliar with the registration statement, for an IPO, the most typical form is the S1 and this is where the working group is going to go through all the required sections of the document and assign roles and responsibilities. Legal is going to own a good chunk of the documents such as the risk factors and the MDNA. The accounting team and your technical accounting experts will typically own the financial statements and any tables in the MDNA or other sections of the document that will have financial information. Management and legal will work through areas like the business overview and business drivers.

0:27:29.3 Joe Notaro: At this stage, the working group will determine whether to file confidentially or publicly. The benefit here is, as you go down the confidential path, you could get your first round of comments from the SEC. So after you file, 30 days after, the SEC will send a letter with questions or edits on the filed documents that the working group will work together to provide responses to. Again, it will be a divide up and conquer approach based on the section of the document. The comment is left with the goal to respond to the SEC as quickly as possible. During the process, you can generally expect two to three rounds of comments, sometimes more, but this is where having the legal and technical accounting expertise and the experience is really going to come in handy as the comments tend to be consistent and industry specific.

0:28:23.2 Joe Notaro: I mentioned before about the need for interim financial statements and I also mentioned in the example needing both 6 months and 9 months based on the proposed timeline of the company. This is because you cannot file a registration statement with financial statements older than 134 days. So as you respond to the SEC and refile your S1 multiple times during the process, your financial statements are going to go stale at least once. The good news is that interim financial statements do not need to be audited, but they are reviewed by your external auditors. But going from an annual only close to a quarterly close can sometimes be challenging, so it’s important to have the right experts and resources in place.

0:29:08.6 Joe Notaro: The rules can also vary if you’re a foreign private issuer, so it’s important to work with your legal experts to ensure you are in compliance with all the SEC standards. The reason for this is, the SEC rules around financial statement staleness could vary. As a foreign private issuer, the staleness date is usually longer and interim financial statement requirements are different as well. All the time and effort that the working group puts in into the S1 leads up to the roadshow. Bankers are going to drive this stage, working with the company’s management team to connect with investors and help the companies finalize the transaction.

0:29:51.5 Joe Notaro: Banks will set up meetings with potential investors to listen to your pitch and decide if they want to fund your company. It’s important to have your company’s story and pitch buttoned up and ready to go so your team can create a compelling presentation. Investors will make their decisions based on many factors, including the commercial potential of the product, the management team, and the equity narrative presented. The financials may play a limited role in the roadshow depending on the company’s circumstances. However, their accuracy, quality and timeliness are crucial to a successful close. As they approach pricing, companies will often need to process a stock split to update their capital structure for the desired IPO price in accordance with the expected valuation. Those stock splits must be processed through the entire S1 document in real time. This is a very time consuming undertaking and companies only have a small window to process these splits, so must lean on an experienced consultant along with legal counsel for assistance. But if it all comes together, the S1 is declared effective and you’ve completed the journey, you are now a public company.

0:31:05.9 Joe Notaro: While it’s definitely quite the accomplishment to get here, it’s important to remember that this is just the beginning. After the dust settles, you are a public company and are subject to the public reporting deadlines. Typically, the first filing you get a little bit of a grace period, but not for the second. These deadlines will vary based on your filing status with the general rule being, the larger the company, the quicker the turnaround time here. While you continue, you could continue to rely on the external experts you brought in for the IPO. After going public, a lot of times you will start to build out your team internally and bring in people who could close the books, prepare the financial statements and ultimately get through the audit and review in time to meet the public company reporting deadlines. These deadlines could vary if you qualify as a foreign private issuer, which are typically less stringent than domestic filers.

0:32:02.3 Joe Notaro: There is also the matter of internal controls in internal audit. At this point, hopefully you’ve done some work as part of the planning phase and the pre-IPO phase, but now you are on the clock, so to speak. As we discussed earlier, management will need to certify that its internal controls over financial reporting are operating effectively as soon as 404A is required and will require an external audit opinion over the operating effectiveness of internal controls once 404B is required. There are also non-periodic reporting disclosure requirements such as Form 8-Ks, Forms 3s and 4s, an annual proxy statement and earnings releases to think about.

0:32:46.2 Joe Notaro: Another consideration is a perk that most public companies offer to its employees. You may want to issue employee stock options as a public company. So like I said before, the journey has just begun. As I close out on this section, I will leave you with two important takeaways. Start the process as early as possible and you can never have too much help. With that, I’m going to turn it over to John who’s going to go through a deeper dive on equity compensation as it relates to the IPO process.

0:33:22.7 John Bagdonas: All right, Joe, thanks. Thanks very much and I know you’ve already covered a very significant amount of the importance of reporting and particularly, I know you did touch on quite a bit from an equity comp standpoint, but let me just maybe take a little step back and ask just sort of a basic question as I do a little deeper dive into the topic is, why does a company or why did anyone make the choice to undertake this hugely complicated endeavor, meaning going through an IPO or some other capital market transaction? And obviously, at least from my perspective, it’s to reward the shareholders and the employees. It’s driving towards some kind of liquidity event. And again, it’s like once in a lifetime event. But as you have stressed numerous times during your segment, it’s critically important to get it correct, particularly from a reporting standpoint, that you can look at equity compensation to a certain extent as a supporting event up until and through an IPO. But it really is a bigger picture in terms of what your company is going to do, how you’re going to track talent going forward. And so it’s really critically important to get it right and get it on the roadmap, as you’ve stressed quite a bit, as soon as possible.

0:34:35.6 John Bagdonas: The way I like to think about it is, there’s so many variables and things that you are going to have to cover as a company going through this process, as you’ve so thoroughly documented for all of us or let us see, that to the extent that you can get things on the roadmap much further or much earlier in the process, it’s only going to help you so much more, both in the shorter term and going through the IPO process and also longer term. Because if you think about most companies, particularly earlier stage companies or maybe slightly later stage companies, from an equity comp standpoint, you eventually have to graduate from spreadsheets. So it’s not uncommon for companies to start, particularly startup companies and early stage companies, to manage it completely internally, whether it’s just on Excel or some internal application or some of the other third party SaaS applications that are out there to manage cap table and the like. But eventually, as you get later or closer towards that IPO event, the pain starts to increase in terms of what you need to do, whether it’s from a reporting standpoint or actually managing that equity plan.

0:35:48.0 John Bagdonas: And so the choices, in my experience, you see what the big driver, as I said, is typically what are the pain points? And so for some companies, if they have particularly more complex sort of an equity type plan, let’s say, with performance, awards and targets and things like that, there are not that many… I mean, obviously from a spreadsheet standpoint, that’s complicated to manage. And for some of the cap table applications that are out there as well, it’s much more complicated to try to manage it on those platforms as your plan gets more complex, or let’s say, if your shareholders or employees are or become multinational, there are some complexities in terms of offering additional complexities, I should say, of offering equity compensation to people in different parts of the world.

0:36:34.9 John Bagdonas: So it really, really is important to try to reduce those variables or going back to my old engineering days, limited degrees of freedom. The less things that can go wrong, particularly from a risk management standpoint, the better. So it’s very important to get into that cadence of reporting, to have an application or a partner or supplier that can help you with that and also track and manage all of the performance, as I said, tracking of awards, et cetera.

0:37:06.6 John Bagdonas: Another critical thing, as you touched on already, is being able to connect with other applications and integrate into third party systems, particularly from a reporting standpoint. As your reporting becomes much more complicated, it’s much better to have it in one place or to have an application or a partner that is an integrated solution. And so, I can’t stress enough to be able to, or to get focused on and get it on your roadmap as soon as possible. And lastly, just to talk about the importance of using an experienced partner that’s been there, that’s done it before, and that you really want to choose a platform or partner that is truly compliant with all of the requirements and things that you’ve already talked about. They can provide integrated reporting, particularly taking in third party sources and things along those lines.

0:37:57.8 John Bagdonas: The other thing that people sometimes overlook is the communication side of it, particularly from a participant standpoint or even your shareholders, to be able to have a platform where they can easily get that information and appreciate that benefit and what the end result is going to be going through the transaction and what’s another very important piece going forward beyond the IPO or the capitalization event, is to make sure that it’s scalable.

0:38:25.7 John Bagdonas: If you’re a high growth company or on the potential to grow significantly through the IPO and beyond, you want to make sure that you have a solution that’s scalable because as I said, you’re going to have to initially graduate onto some platform or with a partner. But ultimately, you don’t want to have to do that multiple times. So you really want to sit down and make sure you have a provider that, even more importantly, can minimize the number of changes you need to make going through that event. So from a participant or the client standpoint, to the extent that that experience can be the same all the way through that transaction, the transition is very important. So it’s important to look at that and to make sure you make a longer term judgment and selection.

0:39:15.0 John Bagdonas: So hopefully, we’ve provided enough information for people to consider the totality of the event, and I know you covered a tremendous amount of information and I know we could spend the whole day talking about this fascinating subject, but unfortunately we’re well out of time at this point. So thanks Joe for sharing your knowledge and insights. And thank you, all of you for joining us for this special joint webinar from JP Morgan Workplace Solutions in Forvis Mazars.

0:39:43.2 Chris Dohrmann: Thank you, Joe and John. If you’d like to learn more about equity plans and IPOs, you can download our free ebook Going Public: Your Equity Compensation guide to IPO from our website globalshares.com where you’ll also find information on the latest equity compensation news, insights and product updates. And as always, if you’ve made it this far, thanks for listening.

0:40:07.4 Information provided in this podcast is intended for informational and educational purposes only. It may contain views which differ from the views of JP Morgan Chase and Company. For specific guidance on how this information should be applied to your situation, you should consult a qualified professional. For full details, see the show notes on your podcast player right now. The Prosperity at Work Podcast is produced by dustpod.io for JP Morgan Workplace Solutions