Corporate Governance is Top Challenge for Companies Considering an IPO, KPMG Survey Series Finds

Jun 07, 2010, 09:15 ET from KPMG LLP

NEW YORK, June 7 /PRNewswire/ -- Companies considering an initial public offering (IPO) say that improving corporate governance is their top challenge in preparing for an IPO, according to a series of surveys conducted by KPMG LLP, the audit, tax, and advisory firm, during KPMG-NYSE Euronext IPO Bootcamps held nationwide.

When asked to name their top three challenges in preparing for an IPO, the senior executives of companies considering an IPO who were surveyed by KPMG listed improving corporate governance (64 percent), preparation of a robust business plan (40 percent) and preparation of financial track record (36 percent).

"Making the transition from private to public company and meeting both the SEC rules and public expectations involves many steps that need to be accomplished simultaneously," said Aamir Husain, a partner in KPMG LLP's Transaction Advisory Services practice focused on IPO services. "Often, it's the small details that companies overlook that can cause headaches down the road. For example, while many companies realize that corporate governance is a demanding issue, when selecting board members, many don't consider that an important role for directors is working with management to ensure the right tone at the top for ethics and compliance."

Preparation is Key

Most company executives (54 percent) surveyed believe that it would take their company six to 12 months to prepare for an IPO, while 15 percent thought it would require 12 to 18 months of preparation time. Only 10 percent thought it would take six months or less.

"It is encouraging to see that the companies surveyed realize that preparing for an IPO takes considerable time and effort," said Husain. "The foundation of a successful IPO lies in good planning, which should begin by conducting as early as possible a comprehensive assessment of the activities needed for the company to complete its IPO. Having a third-party perspective during this process can be critical to ensuring that nothing is overlooked."

Husain added that while it may seem counterintuitive, one of the best times to begin preparing for an IPO is when the IPO market is slower. Markets can be extremely volatile and a window of opportunity can appear or disappear within weeks. When the market is ripe, companies that are prepared for an IPO can be the first in line to approach the limited number of parties that invest in IPOs, such as pension funds and other institutions, increasing the likelihood of attracting investors.

Encouragingly, many of those surveyed said that their companies had already undertaken numerous organizational changes in response to a planned IPO. This includes strengthening financial and accounting systems (69 percent), upgrading internal controls (52 percent), being accountable for quarterly results (40 percent) and developing a robust business plan (40 percent).

The surveys were conducted at KPMG-NYSE Euronext IPO Bootcamps in Palo Alto, Calif., Boston, Los Angeles, New York, Chicago and Denver held from September 2009 - April 2010. The 110 respondents include senior executives from companies representing a variety of industries.

About KPMG's IPO Advisory Services

KPMG's Transaction Advisory Services team provides a full range of IPO services to assist companies throughout the offering process. KPMG can help companies identify information needs, develop controls, and enhance processes, including performing a comprehensive IPO readiness assessment. Leveraging its experience working with the Securities and Exchange Commission (SEC), attorneys and investment bankers, KPMG's IPO Advisory Services team works closely with a client's accounting and finance professionals to prepare for the requirements of a new reporting environment. Aided by KPMG's project support, including responsibility assignment, issue identification and resolution, and milestone tracking, companies can gauge their progress towards the registration goal.


KPMG LLP, the audit, tax and advisory firm (, is the U.S. member firm of KPMG International Cooperative ("KPMG International.")  KPMG International's member firms have 140,000 professionals, including more than 7,900 partners, in 146 countries.


Jennifer Hurson