The current volatility and uncertainty in the capital markets can make launching an IPO in a favorable window challenging.
The underwriting syndicate’s background investigations of the executives and directors included in an S-1 can raise diligence issues that need to be addressed before the IPO launches. While remedies to issues surfaced are often manageable, when issues are identified late in underwriters’ IPO diligence process, they can have an outsized impact—including the need to potentially revise parts of the S-1 or even replace an officer or director.
When the issuer proactively conducts these background investigations earlier as part of their IPO readiness process, any red flags identified can be remediated or pro-actively addressed with the underwriters. Ultimately, an issuer broadening the scope of their IPO readiness process increases the likelihood they’ll avoid many of the issues that could scuttle their ability to launch in an optimal IPO window.
This CRA Insights looks at various areas for issuers and their counsel to consider as part of their IPO readiness process including:
- How issuers can optimize timing for an IPO launch;
- Potential impact of the underwriters uncovering red flags in their IPO diligence process; and
- Illustrative examples of the types of findings that can adversely impact planned timing if not uncovered until late in the IPO diligence process.
