Corporate housekeeping is not very sexy. Business magazines don’t do full color spreads about corporate paperwork matters. It may not be on top of your ‘to do’ list either. But it’s critical to maintaining your business.
Think you might seek new funding, sell your company or do an IPO in the future? That won’t happen if your corporate house is a mess.
- Do you know where your key documents are? Are they up to date? Are there copies in a secure location?
- Investors, buyers and underwriters will do pre-transaction due diligence research to make sure you have copies of all of your key documents to see if they have any unusual provisions.
- Check your records. Do you have missing board minutes, stock option grant approvals or employee proprietary information agreements? Are your documents in a disorganized pile? If so, your deal may be severely delayed at the least and prevented at the worst.
- Will you have the time and energy to pursue this deal, run your business and get your corporate house in order at the same time?
Do yourself and your business a favor. Get organized. Start now.
- Set up your own secure cloud data site.
- Organize it into folders that correspond with the categories that you would see in a typical investor/buyer due diligence request list.
- Create folders for board and stockholder minutes, stock records, employment agreements, commercial agreements, etc.
Once that’s done, keep it updated and include new documents as time passes. It should be easy and there are many advantages to this approach.
- When you get that term sheet for a new financing or a Letter of Intent for the sale of the company, due diligence research by others won’t be a problem. You can use your time and energy to run your business and negotiate the best deal, not to chase after documents.
- With fewer corporate housekeeping problems, the buyer/investor will have fewer reasons to “re-cut” your deal and make it more expensive for you prior to closing.
- You want to impress investors/buyers and being organized is one way to do that. The level of due diligence may go down a notch because your company and its records look so clean or orderly. The process could move faster and lower the risk of “deal fatigue.”
- A regular routine of maintaining the data site may result in you finding and fixing corporate problems early before they blossom into potential deal killers.
If you have any questions about corporate matters, what records need to be maintained or have discovered important documents are missing, contact my office so we can talk about your necessary corporate housekeeping