09 Nov Working With Going Public Advisors: Part IX – Industry Experience

I have found that, while not absolutely critical, it can be very helpful in working with advisors who assist companies in going public if they have some knowledge and experience of the industry in which you operate. For certain members of the team you need to get public, like your auditors, that experience is actually extremely important. And if you are in a regulated industry such as aviation, telecommunications or health care, it will be important to have, in addition to your regular securities counsel, a legal expert in your particular industry’s regulatory environment.

But the consultants who act as maestros of the overall process of achieving a publicly trading stock don’t always have specific industry expertise. And it may not be necessary as long as other advisors can assist in that regard. But some do present themselves as having completed a number of deals in particular areas of business. Regardless, if you are contemplating engaging someone to help you go public, ask if they have assisted other companies in your industry. If so, get their sense of how those transactions fared. If possible, seek an introduction to other CEOs of companies in your industry (assuming they are not competitive).

Industry experience, while generally seen as a positive, also can get tricky. If your potential advisor has helped a direct (or even indirect) competitor of yours in the past, a potential conflict can be created. Attorneys are bound by attorney-client privilege and cannot typically reveal discussions between them and their client. But consultants have no such limitation. Therefore, in any agreement make sure there are very strong confidentiality provisions ensuring that the consultant cannot reveal private information about your company to any third party.