Late-Stage GC Insights: Navigating the Road to an IPO

By: Ran Ben-Tzur

Fenwick corporate partner Ran Ben-Tzur recently led a small group discussion, “How can GCs identify, prepare for, and respond to pitfalls on the road to IPO?” at TechGC’s IPO Conference held in San Francisco. Below are some key takeaways gleaned from the conversation, which included insights from in-house counsel at late-stage private technology and life sciences companies.

How are GCs navigating IPO preparation in an environment where companies aren’t going public and where there may be more pressing internal priorities?

Ran: There are certain things that a company is ‘required’ to do prior to an IPO, such as having two years of PCAOB (Public Company Accounting Oversight Board) compliant financial statements and having a majority independent board and independent board committees. However, there are many equally important things that a company does to get ‘public ready’ that, although not strictly required by the rules, are important to focus on regardless of if the company decides to go public.

These include establishing governance structures, implementing systems and tools to ensure quick and accurate financial reporting, ensuring that the company’s capitalization is accurate and building a strong compliance program, among other things. Accordingly, despite the current IPO market downturn, many executive teams, including GCs, are continuing to spend time focusing on public readiness initiatives.

What are the challenges of building a ‘public ready’ compliance program at a late-stage private company?

Ran: As a company matures, and as the legal function gets built out and becomes involved in establishing more rigorous processes around contracting and compliance, there are often tensions between legal and other aspects of the business. Business teams at earlier-stage private companies want to move fast and they are often not used to legal “getting in the way.” It is the GC’s job to ‘sell’ the business side on the importance of establishing strong processes and compliance and how these things will ultimately be beneficial to the company. For example, many pre-IPO technology companies share financial and other information broadly with their employees. A GC can sell leadership on being more careful about information sharing by pointing out that broad information sharing would limit employees' ability to trade post-IPO. Another example is building out rigorous contract processes which would help the company to avoid internal control failure and financial restatements. 

One GC suggested making stakeholders within the organization understand that they will eventually have to go through a rigorous diligence processes in connection with an IPO (or an M&A or financing) and that having a strong compliance program will significantly streamline the diligence process. GCs should keep in mind that changes within the organization should be implemented thoughtfully (and ideally within the confines of the company’s culture) – a ‘rip the band aid’ approach is oftentimes not the best way to do it, will likely result in further tensions between business and legal and may ultimately be counterproductive.

How are GCs that haven’t gotten through an IPO process educating themselves about an IPO?

Ran: Many are relying heavily on outside counsel to educate them about what they need to know as well as through self-study using online materials, such as Fenwick’s IPO and Direct Listing Checklist. We are always talking with late-stage clients about specific questions or scenarios that arise as they prepare for life as a public company, and are here to walk them through this interesting and challenging period of time when it is unclear when the IPO window will open up again in a significant way. But when it does, we want our clients to be fully prepared.

What are late-stage private companies focused on in the current environment?

Ran: Companies are adjusting from ‘grow at all costs’ to profitable growth. Legal is having to adjust to this environment. GCs are now facing issues like reductions in force, option repricings and other activities that occur during a slowdown, while also at the same time focusing on ensuring that the company is 'public ready’ when the markets recover.

Ran is a capital markets and public companies partner at Fenwick. He represents clients on initial public offerings and other equity and debt offerings, as well as SEC compliance and corporate governance. He was recognized in 2022 as a “Dealmaker of the Year” by The American Lawyer, and was named a Capital Markets MVP by Law360 the last two years. Reach out to Ran at or connect with him on LinkedIn.

See more pictures from the conference on Fenwick's social media.