Revolutionizing the IPO Process: How AI and Automation are Changing the Business Landscape


Mike Whitmire, CEO and co-founder of FloQast, CPA

2023 was a year of massive technological advancement. The way we work has completely shifted thanks to groundbreaking new inventions like generative AI – a tool so popular that we’re expected to see more than 100 million Americans use it in the coming year. As we head into 2024, generative AI, automation, machine learning, and other innovations will likely begin to impact the IPO landscape as well.

Despite a challenging global economy and geopolitical landscape, the outlook for the IPO landscape is expected to improve in the coming year. In fact, 40% of private company CEOs are considering IPOs next year. 

Now, with the rise of generative AI and automation, business leaders have an opportunity to enhance their operations and achieve their IPO goals. From the very first stages of research and development, all the way through post-IPO analysis, AI and automation can be a critical tool that supports teams, streamlines processes, and ensures accuracy. As the IPO landscape heats up, there are several key ways that AI and automation can support businesses along their IPO journey. 

AI and Automation on the Road to IPO

Deciding to Go Public

Starting at the beginning of the process, AI and automation are useful tools to help business leaders analyze financials and determine the optimal time to enter the public market. When a company decides to go public, AI algorithms can analyze market conditions, trends, and investor sentiment to help companies determine the optimal time for an IPO.

Once the timeline is set, AI and automation can assist in financial modeling, forecasting, and scenario analysis. This can provide a clearer picture of the company’s financial health — something that is useful for both valuation and investor confidence.

In the Midst of an IPO

Then, with a plan in motion, AI is critical to streamlining processes and boosting efficiency and strategic capabilities. AI-driven automation can create, review, and organize various IPO-related documents, helping to reduce manual workload while minimizing the risk of errors. One study found that, when automation is implemented, employees can save about 3.6 hours a week, or 23 working days per year. As companies prepare to IPO, having this time back could not be more impactful.

For accountants in particular — perhaps the important group of employees for the IPO process — a recent study from FloQast found that having the right technology means upstream and downstream processes are better integrated with their work, and both the execution of work and overarching company performance are improved.

To Boost Compliance

Additionally, AI and automation tools can collect and better utilize performance metrics and the data needed for compliance. Not only are manual business processes prone to human error, but tracking down these errors can waste valuable time and money. As companies have strict deadlines throughout the IPO process, ensuring no wasted time is critical.

In the compliance space, AI can streamline the due diligence process by quickly analyzing vast amounts of data like financial statements, legal documents, contracts, and other relevant information. This analysis can help identify potential risks, anomalies, or areas requiring further investigation, providing a more comprehensive view for investors.

However, while AI can be a useful tool to help streamline the compliance process, it is important to note that the compliance environment around utilizing AI is still evolving. Companies should take a pragmatic, calculated approach to adopting AI for compliance purposes, especially as the landscape evolves.

In the IPO Aftermath

Finally, once the IPO is live, AI and automation can be utilized to monitor post-IPO performance. AI analytics tools can monitor and analyze the performance of the company after it’s gone public. This can help navigate investor relations and market dynamics and allows leaders to make data-driven adjustments to the overarching business strategy.

The Human Impact

Despite the incredible impact that AI and automation can have on the IPO process, human expertise and judgment are still necessary for optimal results. While AI and automation are ideal for streamlining processes, improving accuracy, and assuming repetitive tasks, actual humans are needed for the complex decision-making that comes alongside an IPO. For example, AI and automation can churn out a plethora of data and analyze it at a base level, but people still need to examine that data and findings and decide how it will impact or influence the company. Additionally, human intuition and experience are invaluable in identifying potential risks and opportunities that AI may overlook.

Moreover, the IPO process requires interactions with potential investors that call for a human touch. Building trust and conveying the company’s vision often require nuanced interpersonal skills that AI and automation lack.

With such a dynamic landscape, AI and automation are useful tools to help improve the IPO process, but human adaptability, experience, and judgment are essential for navigating the complexities and uncertainties along the way.

An Empowered IPO Process

Over the past year, we’ve witnessed a profound technological transformation that reshaped how we work, with generative AI and automation playing pivotal roles. As we step into 2024, the impact of these innovations is poised to extend to the IPO landscape. From financial analysis to post-IPO monitoring, these tools offer unparalleled support, streamlining processes, enhancing efficiency, and ensuring accuracy.

As businesses embark on their IPO journeys, the magic of AI and automation emerges not only as a time-saving solution but as a strategic enabler, empowering employees and leaders to navigate complexities and achieve their IPO goals in the dynamic landscape of 2024 and beyond.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Original Post

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