Why and How to Use a Virtual Data Room for an IPO?

A virtual data room is a highly secure, centralized, fully searchable, and indexed online virtual data room that enables all members of your IPO workgroup to access mission-critical content 24/7. Here is more about software capabilities.

How to organize an IPO deal efficiently?

The IPO market continues to reflect the general changes in the global economy, namely, vigorous growth in emerging economies, associated with a large consumer market and high investment returns compared to developed countries. An IPO provides an opportunity to attract financial resources from the equity capital market, and – most the main thing is to open up the opportunity for the company to turn to this source again and again. An IPO helps a company finance its growth, provides capital structure flexibility, reduces the cost of capital and debt, maximizes the company’s value, and provides liquidity to shareholders. If a company already has a high debt load and a negligible debt service flow, it would be inappropriate to raise debt capital. Also, several companies that have placed shares claim increased opportunities to attract cheap borrowed resources.

The company needs to be prepared to enter the public market. It is a great joint work of a team of professional consultants: investment banks, law firms, and auditors. It is necessary to build clear ownership relations between the parent, subsidiary, and dependent companies, eliminate transfer pricing, and keep accounting records following international standards. The primary purpose of the auditor is to check and confirm the correctness of the accounting and financial statements given in the prospectus of securities and their compliance with international accounting standards. Legal consulting firms are actively involved in preparing draft issuance documents, an information memorandum, corporate decisions, etc., conducting legal due diligence of the business, and accompanying the information disclosure process. Legal advisers also confirm the necessary information for the underwriter regarding the IPO transaction and the issuer.

Virtual data room for transparent and secure an IPO deal

Thorough preparation is everything. It is particularly true when preparing for an IPO. Therefore, extensive due diligence is regularly carried out to determine whether an IPO candidate is ready for the stock market. This check is intended to minimize risks and potential prospectus liability claims. However, due diligence also focuses on the company valuation by critically questioning the assumptions on which the valuation is based. As a result, it provides valuable insights into your own company and helps identify and eliminate existing risks promptly and comprehensively. The data to be checked in due diligence is usually available in an electronic or virtual data room. Development and implementation of data room management systems at the enterprise for IPOs allow:

  • reduce the time for approval of internal documentation;
  • ensure order and clear routes for the approval of papers;
  • increase the controllability of processes and compliance with time regulations;
  • ensure the safety of documents in the archive;
  • reduce the routine burden on managers;
  • increase employee loyalty.

The digital data room is a highly secure, centralized, and fully searchable document warehouse. Setup takes minutes (instead of hours), and your team can confidently support the preparation and due diligence cycles with access to relevant documentation at any time. It is exactly why the data room is a pre-IPO lifesaver. This cloud-based solution facilitates the fast and efficient preparation of all business-critical documentation while assisting syndicate banks and other working group members in conducting effective and thorough due diligence for IPO deals.