With fees and expenses often reaching six or seven figures, companies who choose to go public are making a big bet on themselves. On average, new issuers can expect to spend 5% of their value during the IPO process alone.
If your company is considering going public, the time to ensure your board is adopting best security practices is right now. Public companies have various reporting requirements and stringent guidelines on how they prepare and distribute materials. By adopting best security practices at the beginning of the process, directors and leadership teams are better prepared for a smoother transition from a private to a public company.
More companies are turning to board portals as a way to improve security. For the pre-IPO company, the use of a board portal can provide board members with a dedicated platform throughout the IPO process that minimizes risks associated with going public.
1. Effective and Secure Communications
Rather than communicating via email, board members can communicate more effectively and securely through a board portal. This eliminates the risks of information being transferred between personal and professional email accounts. With a board portal, members can make notes on materials for their own use or to share with selected members for further discussion, providing a single location for members to collaborate and ask questions.
2. Gathering Information to Meet Requirements
The transition from private to a public means meeting new government requirements and regulations. Preparing to meet these requirements includes gathering information for investigation by the auditor, underwriter and legal team. There is a whole due diligence process the company must go through. Much of it is gathering and categorizing information, such as bylaws, organizational documents, and a list of subsidiaries into a single repository. The process usually begins six to 12 months ahead of filing an S-1. When the information is in one location, the board can easily review documents, as well as ensure that all members have the final version of the shared materials. A board portal offers an easy place to keep track of board goals, meetings and deadlines.
3. Advanced Meeting Preparation
As a private company, the board of directors isn't held to the same type of scrutiny as a public company, leaving more time at meetings for discussion and strategic planning. However, once the company considers going public, the nature of board meetings has to change. As Stan Silverman explained in the Philadelphia Business Journal, public company boards have a formal board process to satisfy the "the complex regulatory requirements of a public company," which include various financial reports for investors.
To run more complex board meetings effectively, advance preparation is a must. A well-prepared board member has access to review materials ahead of time so they can have a preliminary discussion on the agenda with other directors. By taking care of basic preparation in the weeks leading up to the meeting, the meeting itself can focus on important issues. The board portal allows board members to raise concerns beforehand, saving the meeting itself for decision-making and getting the most from the members' expertise.
4. Sharing High-Level Information
As a company prepares to go public, sensitive corporate information must be shared. Sending this information over email, even with password protection exposes the company to unnecessary risk.
Board portals provide a higher level of security other information-sharing tools and systems. For instance, all documents loaded into the portal are highly encrypted. Those materials are stored on one network rather than multiple networks with different security protocols. Company staffers also have control over all of the materials within a board portal, including which users have access to different files, whether those files can be printed or downloaded to a device to be read offline. The portal is a closed loop system, and this increases the overall security for everyone on your board and every document that is shared or stored.
In the months before going public, companies need to be at the top of their game in order to meet all of the necessary requirements effectively prepare the board. Having the right board portal allows companies to streamline the process while ensuring security and adhering to governance best practices.