Submitting an S-1 or 1-A file to the SEC for your IPO can be nerve-wracking. However, the SEC is not grading your paper like it’s your senior thesis. In fact, the SEC actually WANTS companies to thrive. To succeed. What they don’t want is investor fraud. The working team (especially the corporation) needs to understand this. The comments you receive back are meant to guide and sculpt your communications as you move from private to public. To learn about “transparency.”.
Time is on my side, yes it is.
The SEC’s time-frame objective is to provide initial comments on a Form S-1 within 30 days after the initial filing. They don’t commit to any specific timing for the staff to review and comment on the company’s responses to their initial and subsequent comments. The time necessary for SEC review depends on the depth and nature of their staff’s comments and the company’s changes to the Form S-1, the quality of the company’s response, staff workloads and other workflow variables. On average, it’s safe to plan for a two week “ping-pong” per each round of amendments.
Dance this mess around.
To perhaps keep a step ahead of the SEC, companies can research the trends found with peer and sector companies’ comment letters. After an S-1 Registration Statement becomes Effective, the letters from the company, or its securities counsel, are visible on the SEC’s EDGAR.gov site. Simultaneously, when responding to SEC Comments, a company also amends its S-1 from the guidance provided in the SEC’s Comments. Those amendments are also posted to EDGAR.
Below is a chart of the comments made by the SEC in Q1 and Q2 2016. As we all know, GAAP v non-GAAP was a top priority for the SEC in 2016. Assume 2017 to be the same.
CLICK IMAGE TO ENLARGE. Audit Analytics is the superb data source.
One note: Non-GAAP comments have more than doubled in two years. Mind the GAAP. Pardon the tired pun.
To get an illustrative “visual” and tactical explanation of the workflow for S-1 and 1-A registrations with the SEC, I recommend THIS GUIDE. It is one of our most popular whitepapers.