Planning for an IPO Advanced planning is critical to executing a successful IPO, and preparations should begin well in advance of the IPO organizational meeting. Most companies must make legal and operational changes before proceeding with an IPO to position themselves for success and ensure compliance with SEC and stock exchange requirements. In particular, many corporate governance and compensation matters (including substantive obligations and disclosure items arising under federal securities law requirements, such as PCAOB-compliant audited financial statements), as well as applicable securities exchange requirements, must be satisfied by the time the IPO registration statement is publicly filed with the Securities Exchange Commission (the “SEC”), or the company must commit to satisfy them within a set time period. A company proposing to list securities on a national securities exchange should review the governance requirements of the different exchanges, as well as their respective financial listing requirements, before determining which exchange to choose. Although most REITs choose to list on the New York Stock Exchange (“NYSE”), a company proposing to list its securities may choose to list elsewhere for business or other reasons. See “NYSE vs. Nasdaq: Principal Quantitative Listing Requirements” A company must also address other corporate governance matters, including board and committee structure and composition (including taking diversity, equity, and inclusion (“DEI”) and broader environmental, social, and governance (“ESG”) considerations into account), director independence, related party transactions, cybersecurity and privacy matters, and director and officer liability insurance. See “Governance and Board Members.” Additionally, a company should undertake a thorough review of its existing and contemplated compensation for its directors and officers, particularly with respect to its use of stock-based compensation. See “Executive Compensation.” Companies pursuing an IPO should also exercise care in selecting the investment banks that will act as underwriters in the IPO and in designating which underwriters will act as the “bookrunners,” who will lead the IPO process, versus the “co managers,” who typically have significantly smaller roles. Key considerations include the investment bank’s reputation and knowledge of the REIT space (or a particular sector of the REIT space), the proposed mix between institutional and retail sales in the IPO, and the ability to provide post-IPO support, including access to their balance sheets through corporate facilities and reputable analyst coverage, as well as the ability to help stabilize the market for the IPO shares post-IPO. In addition, companies should consider personality fit, keeping in mind that the lead investment banks will be integral in crafting the company’s IPO equity “story” and will lead the marketing process. Governance and Board Members All public companies, including REITs, must comply with significant corporate governance requirements imposed by the federal securities laws and the regulations of the applicable securities exchanges, including with regard to the oversight responsibilities of the board of directors and its committees and, more recently, as to DEI matters, ESG/sustainability initiatives, and proposed climate disclosures. 2024 Guide to REIT IPOs and Listing Transactions | 6
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