The 24-month IPO countdown: a General Counsel’s guide to legal readiness in the Tech industry

Preparing for an Initial Public Offering (IPO) is one of the most transformative (and frankly, daunting) events in a Tech company’s lifecycle. General Counsels play a pivotal but often underestimated role in ensuring that the company meets the complex legal, regulatory, and governance requirements that come with going public. The time leading up to the IPO, typically around 24 months, is when the foundation is either laid correctly or cracked under pressure.

In this article, we’ll outline the key legal tasks GCs should prioritize in the two years before an IPO. From corporate governance upgrades to privacy frameworks, this guide offers practical insights, with tools and tips that legal teams can actually use.

Governance: build a Board that investors trust

One of the first steps GCs should help with is shoring up the company’s governance. A public company needs a transparent, credible board that investors (and regulators) can trust, not just a group of early-stage insiders.

• Strengthen the Board: ensure the Board includes independent directors with relevant expertise. Investors value board diversity and experience in areas like finance, Tech operations, and cybersecurity.
• Avoid filling the board with only “friendly faces” from the early start-up days. Independent oversight is key.
• Create key committees: before going public, you’ll need at least three core committees:
  • Audit Committee: oversees financial reporting and internal controls.
  • Compensation Committee: manages exec pay and equity plans.
  • Nominating & Governance Committee: handles board succession and ethics policies.
• Formalise governance practices: in the U.S., adopt SEC-aligned governance frameworks early, such as the NYSE Governance Standards or Nasdaq’s Board Diversity Rule (if applicable), to avoid last-minute scrambling.

Practical tip: use platforms like BoardEffect or Diligent to manage board records, track committee actions, and automate board evaluations. It saves a ton of admin headaches.

Financial compliance: move away from Start-Up accounting

Once a company goes public, financial transparency is enforced. Pre-IPO companies need airtight financial controls, robust audits, and SOX compliance readiness.

• Prepare for rigorous audits: your financials will be scrutinised by both external auditors and potential investors. Ensure that historical financial data (typically three years) is audit-ready and that you have clear, well-documented revenue recognition policies.
• Proactively clean up any messy accounting practices. Investors are ruthless when they spot inconsistencies.
• Establish SOX controls: public companies must comply with the Sarbanes-Oxley Act (SOX), specifically Section 404 (internal control audits). Start early as SOX readiness can take 12-18 months.
• Map out internal controls and document everything.
• Work with external auditors to pre-test control effectiveness.
• Sharpen financial reporting: ensure financial statements follow GAAP or IFRS standards, depending on the market you plan to list on. Avoid vague or overly optimistic forecasts, regulators will be watching.

Practical tip: use Workiva or FloQast to automate financial reporting and SOX compliance workflows. These tools simplify document management and reduce human error.

Data Privacy and Security: you need robust policies and processes

In the Tech world, data privacy practices are now under as much scrutiny as financials. Companies with weak privacy frameworks risk reputational damage and even regulatory fines post-IPO.

• Data Privacy audits: conduct thorough data mapping to track how personal data is collected, stored, and shared. This will help identify any gaps in compliance with regulations like GDPR or CCPA.
• Don’t just rely on surface-level audits: trace data flows across all systems, including SaaS integrations.
• Strengthen Privacy Policies: review and update privacy policies to clearly outline data usage practices. Ensure policies align with global privacy regulations, even if you’re only listing in the U.S.
• Cross-border Tech companies are particularly vulnerable to privacy lawsuits.
• Cybersecurity drills: conduct tabletop exercises for breach scenarios. Investors want to know you can handle incidents effectively.

Practical tip: use OneTrust or BigID for automated privacy audits and compliance tracking. For cybersecurity drills, consider Immersive Labs, which runs simulated breach exercises for legal and IT teams.

IP protection: no surprises for shareholders

For Tech companies, intellectual property (IP) is often their most valuable asset. GCs must ensure that all IP is properly documented and protected before the IPO (messy IP disputes might scare off investors).

• IP portfolio review: conduct a full IP audit to confirm that patents, trademarks, and proprietary code are properly registered and protected.
• Verify that IP ownership is clear, especially in contractor agreements.
• Clean up any overlapping or poorly defined patents.
• Review licensing agreements: ensure that licensing contracts are clear and that there are no IP ownership disputes lurking. Investors will ask.
• Mitigate infringement risks: identify any potential IP infringement claims early on and resolve them before filing.

Practical tip: use Anaqua or CPA Global to manage IP portfolios and track licensing agreements efficiently.

Contracts: tighten all your material agreements

Legal due diligence is one of the most time-consuming parts of an IPO. GCs should begin streamlining contracts and resolving legal risks early.

• Review material contracts: audit all customer, vendor, and partner contracts. Ensure they comply with public market standards.
• Identify and renegotiate any contracts with ambiguous liability clauses, exclusivity or termination risks.
• If relevant to your business operations, ensure force majeure clauses are clear and updated.
• Evaluate employee agreements: review equity compensation agreements and vesting schedules to ensure they are IPO-ready.
• Update contracts to reflect post-IPO structures, including RSUs or stock purchase plans.

Practical tip: use ContractWorks to automate contract reviews and track legal obligations.

ESG and public perception: prepare for shareholder scrutiny

Investors are increasingly focused on Environmental, Social, and Governance (ESG) practices. Companies with strong ESG practices are viewed as lower-risk and more sustainable by public markets.

• Adopt ESG reporting frameworks: implement frameworks like SASB or TCFD to demonstrate transparency in ESG practices.
• Prepare for investor questions: investors will ask about environmental governance and sustainability, be ready with clear, measurable responses.

Practical tip: use EcoVadis or CSRHub to benchmark and report on ESG performance.

Final IPO prep: legal due diligence and filings

As the IPO date approaches, GCs must ensure that all legal and regulatory obligations are met, including filing the Prospectus or S-1 registration statement (or equivalent).

• Ensure all disclosures are audit-ready: work with external counsel to verify the Prospectus or S-1 filing accurately discloses all legal risks, IP assets, and pending disputes.
• Due diligence with external firms: engage with external counsel to review all legal, financial, and compliance records.

Conclusion: IPO Readiness Is a Marathon, Not a Sprint

Preparing for an IPO is a two-year legal marathon that requires foresight, thoroughness, and precision. GCs who proactively manage governance, compliance, privacy, and contracts will give their companies the best chance for a successful public debut, without unwelcome surprises.