Get IPO ready: 6 benefits to choosing cloud-based equity plan management solution

Going public is one of the biggest milestones a company can achieve, but it’s also a time-consuming, often very stressful process with many moving parts and brings with it new obligations. Transitioning from a privately held organization, via an initial public offering (IPO), to a publicly traded company requires immense planning, regulatory compliance and internal adjustments before the sale of stocks to the public can commence.

For many businesses that are preparing for an IPO, having a dedicated share plan administrator onside can help. Here are six benefits to choosing a cloud-based equity plan management solution:

1. Data migration

Imagine being able to go from private to public in the one system. Having access to software designed to help you manage and migrate your equity compensation plans as your company expands, supporting you on the road to IPO, can work to make this transition as smooth as possible. With software that streamlines the day-to-day execution of transactions, you’ll also benefit from the automation of tracking and administration of your equity compensation. In other words, cap table management and administration simplified.

Choosing a digital solution can also help when it comes to online share trading thereby enabling your plan participants and employees to purchase, sell and exercise pre-IPO and shift to direct to market transactions and share/fund disbursement when the company is pubic. With this help, your company may be in a position to support a wide range of equity awards and plan types as you scale.

All this means that when the time comes to go public, you’re covered

2. Help with financial reporting

One of the biggest challenges facing companies preparing to go public is meeting the strict Securities and Exchange Commission (SEC), or other local equivalent, regulations and adhering to complex reporting standards. Your company will need to assure these regulatory bodies that you’re meeting those obligations and adhering to the rules.

Another challenge is that there may be tax implications and your company will need to get the facts on this straight.

By working with a stock plan administrator, you’ll get access to trusted and experienced professionals, along with fully integrated financial reporting and compliance management integrated into everyday operations. You’ll also enjoy the benefits of a simplified reporting and record-keeping process.

3. From local to global

As your company grows you may decide to grant equity to employees globally. However, staying compliant in various jurisdictions can be quite challenging because local laws and regulations often differ or may change over time.

Your company will need to ensure that it stays compliant and avoids costly penalties. Having access to the trusted information and experience that come with an experienced equity compensation provider can help to keep you in step with global compliance requirements as your global share plans scale.

4. A ready clean cap table

When a company is starting out, it’s common to track ownership manually, but as it grows, things get more complex. For companies preparing for a funding round or a liquidity event having a clean, well-maintained capitalization ‘cap’ table in place is crucial since it outlines who controls the ownership and direction of your company.

Having your cap table and equity plans all managed on one secure, easy-to-access platform makes it easier to track your investors, manage your stock option plans and model future funding rounds. Equity compensation software makes it easier for companies to manage large amounts of data and keep complicated information in order, meaning you’ll have complete control of your company’s ownership.

Partnering with an equity plan provider that supports companies at all stages, means you’ll have help managing your company’s equity from inception all the way through to IPO and beyond.

5. Employee communications

It’s essential to develop a robust employee communication strategy if you plan to launch an LTIP – (Long Term Investment Plan) and/or ESPP – (Employee Stock Purchase Plan) as you approach IPO. This is vital to help your employees understand the benefits, tax implications and details of how the plan operates. For pre-IPO companies who are already under pressure and whose compensation program is becoming complex, this can be an added challenge, one they may not have time to work on alone.

Partnering with a professional equity plan provider means getting assistance when it comes to developing an employee communications program. This can help to ensure your employees stand the best chance of being informed, educated and inspired.

6. Assistance when you need it

Continuity of service is a priority for any company going from private to public or making any change to the ownership of its company – which is why customer care is such a crucial factor.

Companies may choose to seek out a share plan administrator who can continue providing a best-in-class support service, whether that is through customer support phone lines for your participants or, for plan admins, having access to a dedicated account manager.

After all, as your company scales, equity compensation gets more complex and you gain more participants who require assistance at various points along the way, freeing you up to concentrate on the liquidity event at hand.

Contact us now

Regardless of whether you are planning for a liquidity event in the near future or have not even considered this fully yet, it’s essential that you’re prepared.

At J.P. Morgan Workplace Solutions we provide businesses of all sizes with an all-in-one equity compensation management solution. We handle all the equity award administration so you’ve got more time to focus on your company’s journey. Get in touch today to find out how we could assist with equity design and management at this crucial time.