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Howard E. Berkenblit
In 2014, I completed my first marathon and wrote a column for Banker & Tradesman comparing the experience to that of a company going public. I am about to run my second marathon and, six years later, I’ve noticed that while a few things have changed, the comparison is as apt as ever. Careful preparation, along with a recognition of the unpredictability of external forces, is essential to both a successful marathon and a successful IPO.
Don’t underestimate how long it takes to prepare. In the past six years, new technologies have come along that help facilitate both marathon training and the IPO process, but the underlying need for advance preparation hasn’t changed. To train properly for a marathon, a runner must still start focusing on a regimented schedule several months in advance.
Similarly, planning for an IPO still takes months. While the SEC review timeline has generally gotten a little bit shorter since 2014, to get ready for an initial SEC submission a company must still be well-organized, with a fully populated diligence data room, advanced plans for governance changes, complete financial statements, organized records and extensive drafting of required disclosures.
Follow a Plan, But Be Flexible
Set up a schedule and follow it. This has not changed since I last wrote. Going out too fast will tire you out for the later portions. An evenly paced work stream with set milestones makes for more predictability with fewer moments of panic. A marathon is exponentially harder than shorter races. It is imperative to establish a training schedule with set distances at the outset and diligently follow it. Similarly, an IPO is exponentially harder than most private financings a pre-IPO company has completed. There are higher standards, more parties involved, more steps, more documents and governance modifications – more of everything. Working with advisers to establish a schedule and reviewing it constantly will make the IPO process go more smoothly.
Some flexibility is also required. Even with the best schedules, unpredictable events occur that require flexibility. For this marathon, I am training in winter – there can be snow, ice or bitter cold on any given day. Rather than get frustrated by these interruptions, I have to be willing to shift around my training schedule. The key is covering my goal distances each week, but how I get there doesn’t usually matter. However, the reasons for diverging from the schedule must be compelling. If I do not treat marathon training as one of my most important priorities, it will adversely impact my results.
During an IPO, a company still has a business to run. Events happen that impact IPO schedules and planning. A company with nimble management that thinks creatively about balancing the high priority of the IPO and the need to stay focused with the challenges of the day-to-day business will succeed.
You also must keep your eyes on the goal. Marathon training requires many lonely miles but you have to keep the endgame of crossing the finish line in mind. The IPO process can be grueling – it taxes company resources, involves minutiae and can feel like it is dragging. Companies must continue to focus on their ultimate goal and not be overshadowed by procedural roadblocks and mental exhaustion along the way.
Pay Attention and Ask for Input
For both marathons and IPOs, good advisers are essential. Many people have successfully run marathons and many companies have had successful IPOs. But every runner and every company is different. What works for some may not work for others. The marathon I am doing this year has a completely different “vibe” from the last one I ran, but I have spoken with veterans of the race and read about the challenges of the route. Since 2014, many SEC and other rules have changed, along with the economy. Seek out the wisdom of people who have been through the process and know your industry, but also are up to date on the current rules and trends.
As you go through the process, it’s important to be appreciative of all constituencies. While running a marathon is more individualistic than an IPO, it cannot be done without support from family, friends and others. I am again running in support of a charity, which organizes team training runs. Having the support of teammates with the same philanthropic goal in mind buoys us all. In an IPO, many people will work hard to help the company – lawyers, accountants, bankers, financial printers and investor relations firms are all key players that bring important knowledge and experience to the table. When things get heated, remember we’re all on the same team with the same goal.
Lastly, you must listen to your body. In marathon training, I have to focus on hydration, nutrition and equipment to ensure I stay healthy and finish the race. In the IPO process, companies must pay attention to different forces – signs in the markets, business trends, what peers are doing. In addition to the preparations on the “official” schedule, companies must constantly observe what is going on around them to ensure that their corporate “body” stays healthy and prepared for the long journey ahead.
I look forward to the thrill of crossing another marathon finish line in April. As I stated in 2014, perhaps the best piece of advice is to enjoy it when it’s done – completing a marathon or debuting your IPO provides incredible highs that represent the culmination of extraordinary efforts. The well-prepared can look forward to the triumphant end to the process: crossing the finish line literally or figuratively. Savor those moments, as they will be over quickly – then get back to work.
Howard E. Berkenblit, a partner at Sullivan & Worcester LLP, is leader of the firm’s capital markets group.
