Going Public: Be Aware of All of the Costs

Sarbanes-Oxley is not the only incremental costs that growth companies must incur by going public. In the December 2011 issue of CFO Magazine, the article "The True Cost of Going Public" highlights many other cost factors.

Based on survey results from Ernst & Young, additional compensation for CEO's, CFO's, investor relations, and advisers can add to over a million dollars or more, depending on the size of the organization. Additional board members will most likely be sought as well, adding to director compensation prior to the IPO. The survey revealed that public companies retain about 11 third party advisers to execute a public offering, averaging about 13 million dollars.

In addition, many organizations find they need new or improved IT systems. 25% surveyed bought a new ERP system. Every company and situation is different, but there is no doubt that a large war-chest of funds will be required, and a variety of outsourced talent.