Jonathan Craig Rich of New York Offers Tips to Companies Exploring an IPO or Capital Raise in Regard to Service Providers and Culture

jonathan rich
  • Affiliate and align yourself with the best people you can. That can, and does mean, people who have deep and complementary knowledge and strengths, are accessible and reliable but also willing to challenge norms and opinions. Often times management teams default to who they know or feel most comfortable with and will agree with them and their choices. Building an echo chamber of groupthink is an awful place to be when trying to consistently iterate, broaden perspectives and develop best practices. 
  • Bring friction and competition to a process. It sounds simple but too often, management teams rely solely on people they know already, a recommendation from a trusted friend, investor or perhaps Board member, or even one service provider recommending a fellow provider they have worked alongside previously and successfully. While that’s a good start, speaking to multiple groups of all types of providers, whether accounting, legal, insurance, transfer agents or banking, is imperative in order to firmly understand the strengths, competencies, approach, costs, personalities and contrasts of each respective group. Having groups actively compete for your business allows management teams to make fully informed decisions and discharge their duties in the process by having objectively evaluated alternatives. 
  • In terms of accounting and legal teams, align with the teams who proactively express interest in and knowledge about your specific stage, business and the industry in which you participate. Professional service providers will easily be responsive and reactive but are they proactively helping you identify issues, best practices and solutions based on specific and comparable experiences they are having with you and other similarly situated clients? It’s easy for a firm to say “we have a capital markets group and experience” or “a team of dedicated healthcare industry lawyers/accountants” but how does that apply to you, your needs and help challenge and develop the frameworks you do and will need. It’s also important to set expectations upfront not only on costs, but on relationships and who will handle your account. Many times, high level, more business development or relationship management senior team members are involved only to transition to younger or less experienced team members when the time for action arises. 
  • When it comes to an IPO or any type of capital markets type initiative, developing a detailed action plan upfront with steps, timing, roles, and responsibilities/deliverables are key to ensuring all participants are on the same page and communication is uniform. It allows you to identify issues, stay on target and cost, and enable each party to understand expectations around their individual responsibilities but how and when it ties to the larger process.