The due diligence process is an important part of preparing to take a company public. The process may require sharing many sensitive internal documents with an investment bank, lawyers, accountants and consultants.
So, what can a company do to ensure everything goes smoothly?
Tip #1: Build The Right Team
From choosing an investment bank or financial advisor to assembling the right in-house management team, choosing who will participate in the due diligence process is an essential step in a successful public offering.
For example, companies should consider whether they’d prefer to work with a larger investment bank that has a lot of experience helping companies go public or with a smaller company that will be more hands-on and offer a more personalized experience.
Tip #2: Create A Communications Plan
During the due diligence process there will be thorough discussions of the company’s business and marketing plans, revenue projections, product development plans, and intellectual property portfolio, as well as conversations about customers, distribution outlets and suppliers.
That means it’s important to proactively develop a communications plan that details how everyone will communicate and share information. For example, since email can be a security risk, the communications plan should include confirmed methods for sharing sensitive information: by messenger, in person or within a virtual data room, etc.
Tip #3: Be Proactive About Compliance
According to Roadmap for An IPO by PricewaterhouseCoopers, “The most successful IPOs are launched by those companies that operate as public companies well in advance of the actual IPO.”
The best way to ensure the due diligence process is quick and as painless as possible is to begin acting like a public company long before actually attempting to become one. That means being in compliance with all aspects of the Sarbanes-Oxley Act of 2002 as well as with the requirements of the listing exchange.
Acting as though the company is in the public sphere long before it actually is will help to ensure there are no surprises during the due diligence process.