Successful IPOs Require Time, Planning, Professionals.

As an entrepreneur, you have invested your heart and soul into your company and watched it grow and prosper. Now it's time for the next big decision -- entering the public marketplace.

Each year, many business owners find that initial public offerings can be extremely rewarding for them and their companies. Indeed, going public can provide a business with a stronger financial base for internal growth and a stronger position for acquisitions, as well as increase the general prestige of the firm.

However, what many don't realize is that the IPO process can, be complicated and time-consuming. To successfully navigate through an IPO, there are some important issues to take into consideration.

An IPO involves a company's first sale of stock to the general public. Any business can go public, from a small, fairly new one to a well-known and established company.

The firm engages an investment banker to act as an advisor and distributor of its securities. The company and the banker then decide on the amount of capital to be raised, the type of security (stock or debt) to be issued, its price and any special features, and the timing for issuing the securities.

Once these things are agreed upon, the investment banker acts as a middleman between the business and the general public.

There are other issues that need to be addressed before the IPO process can begin. The first seems obvious, but is often overlooked in the frenzy to prepare for an IPO.

The backbone of every company should be a well thought out, comprehensive business plan. It should not only describe every aspect of your business but also provide direction to ensure a sound future for your company. If necessary, enlist the help of a financial consultant to prepare your plan for public presentation.

Essential information

An effective business plan should also offer complete background information about the firm, demonstrate a solid idea of what direction you want it to take, describe your plans for growth in infrastructure, include resumes of your management team, and have easily understandable and realistic financial projections.

In other words, it should make potential stockholders feel confident that your business is well managed and a good investment for their future.

As CEO, your first priority should be running your business and keeping it prosperous and thriving. Too many instances have occurred where a business owner has neglected the basic operations of the company to concentrate on the IPO process, only to have that company, fall apart before the offering is even completed.

One of the most important IPO team members and the first one that you should select is an experienced chief financial officer. Your CEO should be the main contact person between you and the rest of your professional advisors.

Your IPO team needs the services of good accounting and law firms that have extensive experience working with your type of company. It is prudent to engage those firms as early as possible in the process -- even possibly before the inception of the process, as they can Provide invaluable assistance. By choosing high-profile accounting and law firms, you may give potential stockholders added confidence through name recognition.

Your accounting firm will inform you of Securities and Exchange Commission requirements for audited financial statements and other financial information. The accounting firm is responsible for ensuring that SEC rules and regulations are followed throughout the process, and at times, this may necessitate performance of an internal audit.

The law firm you engage will provide great assistance by protecting you throughout the IPO process. This firm will need to know your company intimately and often writes a substantial portion of the registration statement in the format and style required by the SEC. The law firm is also responsible for ensuring that SEC rules and regulations are followed.

Finding a banker

You will then need to enlist the services of an investment banker who will help prepare your offering, create a market for your stock, provide support in the "after market" to ensure that the price of your stock remains strong, and keep you informed of how your industry is perceived by the market.

The investment banker should have a strong reputation in the financial community, along with a good track record in successfully consummating IPOs. Expertise in your particular industry also is critical.

Your accountant will be the first to impress upon you the importance of securing bridge financing. The IPO process can be expensive and lengthy, often taking up to three or four months. Even the most profitable businesses have found that they did not have enough money to see their IPO through to completion.

Bridge financing secures extra capital, often through a venture capital company or your investment banker, to ensure that the IPO process can be concluded without any serious financial drain on the firm.

Michael C. Gordon is in charge of the audit practice for the Los Angeles office of BDO Seidman LLP.