In looking ahead toward an initial public offering (IPO), corporations need to be prepared for the vast amount of time and expense that comes with taking a company public. Fees and expenses can run from millions of dollars up to 5% of the company’s value. Undertaking the necessary due diligence in preparing all of the documents needed to meet regulatory requirements can take from six months to a year. In addition to the time and expense, taking a company public carries with it huge risks. Trading prices after an IPO debut are volatile and the subject of much speculation. It’s a well-known fact that fewer than 30% of new IPOs trade at or above their debut price after going public.
As companies prepare to go public, board directors take on more responsibility for the organization’s success and its shortcomings. Many things need to change before the public offering. Boards may need to change their composition to meet regulatory guidelines. They will need to prepare and distribute reams of documents, which should only be transferred using a highly secure platform, such as a board portal.
Board portals help board directors make the transition from private company to IPO smoother, easier and more secure, and decrease many of the risks of going public. Board directors will find themselves ahead of the curve if they adopt best practices for cybersecurity before their initial public offerings.
Board Portal Technology Offers the Most Secure Platform
Due to the sensitive and confidential nature of board communications, security is of the utmost concern, or at least, it should be. Many board directors make the mistake of using their personal, business and board email accounts interchangeably. Personal and standard business accounts lack security, whereas communications inside the board portal are highly secure. Communicating and collaborating inside a board portal eliminates the risks associated with less secure platforms.
Preparing for the Initial Public Offering
The process of preparing for the initial public offering is complex and time-consuming. Board directors must gather numerous documents for investigation and auditing by the auditor, underwriters and legal team. Due diligence begins with categorizing all of the necessary documents in preparation for gathering them to meet the new securities requirements, laws and other regulations. Boards may need to gather such documents as:
- Charters and other organizational documents
- List of subsidiaries
- Banking records
- Financial agreements
- Listing of board directors
- Meeting minutes
The board portal has unlimited storage to keep documents safe and secure throughout the process. Electronic filing systems make the documents easily accessible so that all parties that need documents can get the current information and data.
A board portal helps board directors to keep track of action items, meetings and important deadlines. As deadlines loom, corporate secretaries don’t need to worry about the logistics of shipping and courier schedules. Board directors can pull up documents online even if they’re away for business or pleasure.
Board Portals Support Transitions in Board Agendas
Boards of private companies have more leeway to do things their own way. Public company boards are more heavily scrutinized. Boards that are planning for an IPO will need to spend more time in pre-planning to transition their board agendas, so they can fulfill their regulatory requirements and still have adequate time for board discussions. Advance planning meetings will help boards address new requirements, review materials and make any necessary adjustments to the structure of the agenda.
Boards going public will need to review and discuss various financial reports to prepare them for investors. A board portal gives all board directors access to reports and other materials before the board meeting. If they need to have preliminary discussions for clarification before the meeting, they’ll have the materials in plenty of time to support them.
Doing much of the work around financial reports and other regulatory matters in the pre-meeting stage streamlines the agenda and leaves more time for board discussions.
After the initial public offering, boards will have new and different challenges than those they were used to. Making the switch from paper board books and paper reports to board portals creates efficiency around every aspect of board business. While portals are cost-effective and free up valuable time for board administrators and directors, board directors will want to take some time to familiarize themselves with the workings of the portal before the initial public offering.
Board portals are generally intuitive and easy to use. By getting more familiar with the platform early on in the process, board directors will be much better prepared for the additional duties and challenges that come with IPOs. The time board directors save by using a board portal will give directors the extra time they need to keep the new public company on track and performing well.
Security in Sharing Sensitive Documents
In the final stages before filing the initial public offering, it’s especially important to ensure that documents are kept confidential because of the high level of information that’s required. Any number of problems can occur, from papers getting lost to board directors misplacing a board packet.
Board portals are designed and built with the security needs of boards in mind. Board portal service providers like BoardEffect stay current with the most innovative, up-to-date security measures and maintain the strongest security possible through periodic updates. High levels of encryption prevent cybercriminals from accessing confidential documents and other data.
With a board portal, board members can conduct their business safely inside one network without risking the danger of being connected with outside platforms that have less robust security measures.
Administrators can set up the board portal with user permissions so that only the people who need to access various sections of the portal can obtain documents.
Once a private company debuts its initial public offering, all of the benefits of a board portal become extremely important to board directors. Controlling information, improving processes, simplifying board books, keeping information secure, reducing costs and collaborating using a secure platform are all solutions that assist boards as they make the important and exciting transition toward being a successful public company.