Journey to Going Public: Understanding the IPO Process for the Life Sciences

An aerial view of Browne Consulting team members sitting at a table having a conversation. IPO Process concept.

Eric Rubega

Director
Eric Rubega brings over 15 years of accounting and finance experience to Browne Consulting. He is now a Director and leads a team of 13. He has advised clients on various operational, budgeting, and forecasting matters such as Budget to Actual with detailed explanations, IPO prep, Audit prep, Cap table modeling, NetSuite implementations and data migrations from QuickBooks, and procurement system implementations. Most of Eric’s clients are now in the clinical trial stage.

An IPO is as big of an undertaking as it is an achievement for a life science company. The IPO process is lengthy. There are common pitfalls that companies fall into time and time again that can add delays to the milestone. With proper preparation, as well as strong communication and organization, it is possible to set your company up for a successful IPO. 

Understand the road to IPO for life sciences

If your company is eyeing a potential IPO in the next year or two, now is the perfect time to lay the groundwork. It will make that IPO process as seamless and successful as possible. This occurs by understanding the IPO timeline, and strengthening your organization and communication. 

Set an ideal IPO date and work backward

Once you identify your anticipated IPO date, you will know what timeframe of documentation is required to complete the process. Having an exact date in mind is critical. Even a delay of a few weeks can result in additional required quarterly financial statements, and more work (and cost) for your team. 

Create a detailed IPO timeline and stick to it

The IPO process typically takes three to six months from the date of the organization meeting to the day your company officially goes public. There are several moving parts to the process, and internal and external teams working toward the same goal. Bankers, consultants (including a technical accounting firm), lawyers, auditors, valuation experts, and employees all need to be on the same page every step of the way. Start the process by creating a detailed timeline that all parties agree upon. Hold weekly check-in meetings to ensure all parts of the team are moving at the same pace. 

Communication is key for life science companies

With so many teams working towards one goal over the course of several months, it is imperative to establish and maintain strong communication throughout the IPO process. Each member of the team needs to understand what their roles and responsibilities are. If there are any issues or hurdles, those need to be shared with the group. They need to be addressed as quickly as possible to avoid any potential costly delays. 

At Browne Consulting, we have guided many of our life science clients through the IPO process. The ones that have achieved the highest level of success (ie. a relatively painless IPO process) have been the companies with the strongest organization and communication. They were the companies that adequately divided and conquered the myriad of tasks required to go through an IPO. They communicated well internally and externally along the way. 

The importance of valuation and audit firms

You can always strengthen your company’s communication and organize documentation to the best of your ability. However, if you don’t have the right valuation and audit firms, these legs of the IPO process will still be incredibly challenging. 

Selecting the right valuation firm for your life science company

Choosing the right valuation firm and audit firm can be daunting. This is because both play such a critical role in the IPO process, and not all firms are created equally. At Browne Consulting, we have long standing relationships with reputable valuation firms and audit firms across the country that have successfully navigated our clients through the IPO process. 

There are many valuation firms that perform 409a valuations during the IPO process. The audit firm will heavily scrutinize these valuations. Any issues with the valuation, such as the assumptions, can result in long, expensive delays both to the audit and the IPO process as a whole. Make sure your valuation firm experts are ready to discuss the valuations with the audit firm as early on in the IPO process as possible. Lastly, a reputable valuation firm will always produce a higher quality valuation that stands up to rigorous scrutiny compared to an equity management software company. 

Audit firm selection for your life science company

Preparing for an audit can be a herculean task on its own, so it is imperative to select an audit firm early to get through the lengthy client acceptance process and get down to business. The sooner the audit firm can review your valuation, the sooner the valuation firm can address any questions or issues. When selecting an audit firm, it is important to consider their experience working with companies in the life science industry. This is especially true through the standard IPO process. 

About Browne Consulting

Recently named Top Places to Work in 2023 by Boston Globe, Browne Consulting is an industry leader in life science accounting solutions that set the standard for providing operational finance and accounting support to next-generation science and technology companies. Their top-caliber professionals deliver best-in-class services, enabling clients to focus on breakthrough solutions such as financial planning and analysis support (FP&A), operational accounting, tactical HR support, and more.

Inspired by an agile process for over 100 venture-backed life-science companies, Browne Consulting’s expert professionals are ready to address their clients’ greatest challenges by providing flexible, on-demand solutions and support. To learn more about Browne Consulting’s innovative expertise, please visit www.BrowneConsulting.com.