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Preparing for an Initial Public Offering (IPO) in the Software as a Service (SaaS) industry is a lengthy and challenging process, especially since the landscape is highly competitive. The due diligence, stakeholder alignment, timing, and listing pricing strategy are all complex problems to solve – and for a private company to successfully go public, it all must be executed perfectly, which makes having an IPO-Readiness Checklist ideal to make sure you cover all of your bases.

Making the decision to go public and analyzing success of the public offering requires heavy insight into the business, the most significant insight being the Revenue Lifecycle. From Outstanding AR to Recognized Revenue, to the Revenue Pipeline, all of these metrics will be heavily scrutinized in preparation for IPO because, simply put, investors don’t want to back a company that’s going to fail.

Ask yourself the hard questions now, pre-decision, because investors absolutely will not hesitate to drill down into every minute aspect of the business to find flaws, cracks, and fissures. Before even beginning to utilize an IPO-Readiness Checklist, ask yourself

  • Are you prepared to provide full transparency to people outside of your company?
  • Is your finance team able to produce all necessary financial statements?
  • Are there liabilities? Are you prepared should one arise?
  • Are you and your leadership team prepared to give up a significant amount of control and answer to stockholders?

Still ready for an IPO? Then let’s dig in.

You’ve Made The Decision to Go Public: Looking Back to Go Forward

There are a variety of reasons companies make the decision to go public, like increasing research and development (R&D) or to shore up balance sheets. An Initial Public Offering (IPO) is a private company’s first step in “going public,” or, in other words, being able to sell shares to investors on the stock exchange, getting to ring the iconic bell on opening day.

Katie Ledecky strikes the gavel after ringing the closing NYSE bell.

Photo courtesy of

One of the biggest deterrents for going public is the undeniably stringent regulations set by the Securities and Exchange Commission (SEC) even with the JOBS Act. The others are the tales of IPO failure, like WeWork, Peloton, and Endeavor. The thing to emphasize here is that the IPO process worked as it was intended to for all of these companies – the public market identified flaws in their business models, a sign that the investment market is maturing.

Reviewing these cases is an education, not a warning or discouragement. It’s a reminder of just how important it is to have a sturdy long-term business plan that leverages historical company data and accurate future projections – especially so for SaaS companies.

The first step in prepping for the SEC review is getting your house in order.

Biggest IPO-Readiness Checklist Challenge for SaaS? Immature CRMs.

An immature CRM can lead to inaccuracies in forecasts in the SaaS space which can falter even the most confident executive. Additionally, a backlog of unpaid Invoices and Revenue Leakage from inaccurate Invoices can make a bad situation worse.

A mature, connected technology platform is crucial not just to understand historical data, but to be able to set future expectations, ones that are both reasonable and realistically achievable. One of the most damaging things to a newly public company is missing a revenue or earnings forecast, making the ability to forecast and plan ahead crucial for success. Processes and technology need to be scalable, efficient, and capable of assessing risk.

Rectifying any disconnect or uncertainty in this area means shoring up present-day technology and processes. A Quote-to-Cash engine with easily accessible data that maximizes results should be the premier focus, such as the kind that can be found in a full-scale subscription management solution.

Subscription Management Solutions Are a Must

Subscription management solutions are key to overcoming these obstacles. One of the most powerful engines in the Subscription management space is Salesforce Revenue Cloud, which features the Configure-Price-Quote (CPQ) platform.

Topline growth is extremely common for Salesforce Revenue Cloud adopters. This is due to features in Salesforce Revenue Cloud like quicker Quoting and Contracting capabilities, Renewal Uplift, and robust Approvals.

Another important aspect of Subscription management is accurate Invoicing. Especially with use cases around Usage and Amendments it is increasingly beneficial to see full Subscription management on one platform.

For example, Spaulding Ridge partnered strategically with Definitive Healthcare (DH) to deploy Salesforce CPQ in early 2021. Leveraging Subscription management functionalities, DH experienced a significant increase in Annual Contract Value, as well as an increase in Volume following their deployment.

This provided Definitive Healthcare powerful capabilities to understanding and optimize key go-to-market activities, including pricing and discounting. This helped to support a successful IPO in September 2021 and then open at more than a third above the IPO’s price.

DH is an incredibly generous partner and it means the world to us that they continue to share their success story on how Spaulding Ridge and Salesforce CPQ played a key role in Definitive Healthcare’s growth prior to the launch of their successful IPO.

IPO-Readiness Checklist: Build the Right Team

To launch your company publicly, you need to build the right team – both internally and externally. Internally, you want to review:

Senior Management Team

Internally, leadership needs to be prepared for the imminent accountability to stockholders. You also want to staff people talented in investor relations and financial reporting to prepare for the big lift ahead.

You'll need strong leadership to complete your IPO-Readiness Checklist.

The Board

Most pre-IPO private company boards do not meet SEC standards and requirements. It’s best to start planning far in advance for a much smooth transition for the IPO. There is a grace period post-IPO, it’s worth noting, but building the right board takes time. At a high level, you need:

  • A majority of independent board members (required by both Nasdaq and NYSE)
  • Regular executive sessions (twice per year to fulfill Nasdaq listing standards)
  • Three Committees: Audit, Compensation, and Nominating/Corporate Governance
    • The Audit Committee must have three independent directors compliant with the SEC’s enhanced independence standard and capable of reading and understanding the financial statements. One member must be considered “financially sophisticated” and/or is an “audit committee financial expert” under Regulation S-K.
    • The Compensation Committee generally needs to be comprised of independent, non-employee directors.
    • The Nominating/Corporate Governance Committee calls for a fully independent committee.
  • A charter for each committee listing responsibilities and authorities as prescribed by the SEC rules and listing standards

To sustainably and reasonably staff these board, it’s recommended to have six independent directors. Who’s considered an independent director is another complex situation, with both the NYSE and Nasdaq flagging a number of types of relationships that disqualify individuals from becoming independent directors. Basic restrictions include having been employed by the company at any time during the bast three years or having a family member employed by the company as an executive officer at any time during the past three years.

This tall order of independent directors is just the start – diversity is also becoming more and more important. In 2019, California required boards to include at least one woman by the end of the year; two female directors for boards of five; and three women for boards of six or more by July 2021. Underwriters are taking up the mantle, too, with Goldman Sachs refusing to take a company public without a diverse board of directors that includes women.

Marketing & PR

Your company’s personal persona will be put under a spotlight – clean up your social media and websites, ensuring accurate and up-to-date data, as well as a clear, concise voice across the board. Develop a brand investors will trust – in other words, one that sells.

Standard communications for the newly public company and cross-reference with legal to make sure all communications are compliant. Set up media interviews, press releases, and public appearances. Your public relations team will be working overtime during the IPO, so make sure you’re staffed and well-prepared to handle the extra work.

This is really just the beginning. You’ll also need to find:

  • An underwriter (the most popular being Goldman Sachs)
  • An auditing firm
  • A compensation consultant
  • legal counsel, whether in-house or through a firm

Sarbanes Oxley (SOX) Compliance

As of 2006, all publicly traded companies are required to implement and report internal accounting controls to the SEC for compliance. It’s all about corporate governance and financial disclosure, requiring formal data security policies, communication of data security policies, and consistent enforcement of aforementioned policies. It heavily affects both accounting and HR.

SOX is also expensive to implement, costing anywhere between $500,000 (on the very lowest end) up to more than $2 million in direct compliance costs, including staff time and external audits.

Section 302 requires that the CEO and CFO personally attest to and sign quarterly and annual statements. Misleading or fraudulent reports can result in executives facing up to $1 million in fines and 10 years of imprisonment.

This is a process to take seriously, and much of it begins with having the right tools to analyze sales and finance with the right implementor. Implementing Salesforce Revenue Cloud with Spaulding Ridge is a great step toward SOX compliance with accurate Revenue Forecasts, Monthly and Annual Recurring Revenue calculations, and Prorated Allocations.

Spaulding Does IPO-Readiness

At Spaulding Ridge, we have seen many firms that are readying for IPO and Customer Relationship Management (CRM) solutions like Salesforce are often the source for Pipeline reports.

Spaulding Ridge deploys Best-in-Cloud solutions for their client partners with a focus on connecting the front and back office. Since founding in 2018, Spaulding Ridge has deployed hundreds of connected cloud projects for the SaaS industry.

Execute your IPO perfectly by partnering with Spaulding Ridge.

Questions? Contact Eric Jacobson to talk about IPO-readiness and Salesforce Revenue Cloud.