Lately, there has been relatively slow IPO activity in virtually all sectors, except for one. Last year and so far this year, the health care sector, with biotechnology leading the way, has had the most IPOs, and it doesn’t look like it is about to slow down. For many companies, the IPO process can seem daunting because there are copious details to consider and numerous items to handle. However, it doesn’t have to be a mad dash to the finish or an overly stressful ordeal. Careful planning and diligent preparation will ensure a smooth and (at least somewhat) less stressful IPO. Here are some important ways that using a virtual data room can facilitate the process:
Plan and Analyze Finances
The IPO process involves heavy scrutiny of a company’s financial picture by multiple parties. As a result, companies should begin to prepare for this well in advance. This can be accomplished via strict budgeting and financial record-keeping. Fledgling companies without significant historical data should create and update realistic financial projections.
The key is to analyze the company’s finances on a regular basis and keep detailed records of that information, which can be safely stored and cataloged in a virtual data room. Obviously, it is much easier to do all of this if companies stay on top of it from the get-go and keep everything finance-related extremely organized.
Conduct Internal Audits
Going public opens a company up to a whole new world of rules and regulations. This is especially true in the health care field. In light of this, it is wise for companies to begin to familiarize themselves with the legal realm to which they will be subjected. Of course, in addition to understanding the many pertinent laws and all of their nuances, companies should assess whether they are in compliance with any mandates, and if not, take steps to rectify these issues.
Companies can utilize a virtual data room to stockpile and manage important records, including those relating to accounting, legal, and other applicable departments. By keeping these items organized in one secure location, internal leaders and/or an appointed independent party can easily review the information to identify any potential problems.
Examine Corporate Documents
Companies are established and incorporated every single day, and even though it is usually quick and easy to do this, there is always paperwork associated with the process. Corporate or organizational documents confirm the existence and validity of a company and thus must be kept in a safe, easy to access location.
Documents such as the articles of organization, limited liability company operating agreements, allocation of partnership liabilities, and so on, should be saved in the pre-IPO virtual data room, which can also serve as an online corporate repository. This multi-functional aspect of a virtual data room makes it an indispensable company resource.
Collaborate with Pertinent Partners
The IPO process usually requires the involvement of a lot of people from a lot of different firms, including bankers, lawyers, accountants, and auditors, among countless others. Because biotech companies often deal with sensitive, even dangerous matters and materials (such as potentially toxic chemicals), as well as valuable intellectual property, it is highly likely that even more people will have to get involved in the IPO of a biotech company.
Trying to keep everyone in the loop via phone calls or emails would be virtually impossible. Fortunately, information that is saved in a virtual data room can be shared with anyone, as necessary, without compromising its security.
Prepare and Organize for Essentially Anything and Everything
Ultimately, a virtual data room allows companies to save important documents in a highly secure central repository, ensuring they are prepared and organized for anything and everything that may occur before, during, or after an IPO.