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Archive for category: Private Firms

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Filing for a Public Offering? 5 Tips to Prepare for Public Company Status

A successful Initial Public Offering offers a sense of pride for a firm. Watching your publicly traded company’s symbol flash across the ticker is an elevating experience. But what additional risks does your company face after an IPO?

Changing from a private to public company status will have additional risks that your organization may need to be aware of and it is important to develop a solid risk management strategy that can help your company adapt successfully after an IPO.

Accountability and scrutiny must be taken into account after a company goes public. The amount of exposure involved with an IPO is enormous and senior management must adjust to their new risk profile.

A successful IPO extends your reach from initial investor interest to public stakeholders. Investors and stakeholders must feel confident in your strategic plan and your ability to manage a wide range of risks. In addition, those firms experienced in turning risk into opportunity will be rewarded. Remember your company is now comprised of public as well as private funding and with great power comes great responsibility. Sound strategies for nurturing investor and stakeholder confidence are essential for an IPO’s success.

Here are 5 tips on transitioning your risk management program, as you move from private to public company status.

  1. Start from the top: Your board needs to be in position for successful development of a risk management strategy. Encourage your CFO and your CRO to work in conjunction. Compliance between these positions will successfully build the necessary framework for risk avoidance. This in turn, will set the pace for senior management strategy planning.
  2. Set the stage for effective and robust board governance: Your board governance will need to adapt to your new planning techniques. Since investors are watching more closely, it is time for your board to shine. Make sure you have key players in place that have versatile talents which will enhance rich governance techniques.
  3. No alarms and no surprises: The public market hates surprises. Surprising your investors can cause alarm which will affect confidence. New ideas and strategies should be carefully vetted. This will ensure that new product launches goes smoothly. Make a practice of including risk management in all of your core business unit discussions.
  4. Stay ahead of regulation: Regulations are constantly impacting the market. After an IPO — stay ahead of the curve as much as possible. Keep you investors informed about these changes and share your plans for compliance. This lets investors know your board is effectively keeping your firm on track.
  5. Stop watching everyone else: During the immediate period after an IPO, focus on understanding your unique risk profile and building mitigation strategies to manage the risks. This will provide a solid platform for discussing “risk” with public shareholders.

Adjusting your insurance and risk management program as your firm goes from private to public is important. Contact a TechAssure Association member to learn more about the support they can provide as your build your risk management program.

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5 Tips to Avoid Directors and Officer Liability Claims

Directors and Officers of private firms can be held personally liable for a host of activities, including misuse and misappropriation of funds, knowledge of illegal acts, supplying improper loans, fraudulent activity, and transactions or decisions that have not been approved by the bylaws of the corporation. This is why it is important to not let things like informality and a lack of prudence in your decision-making process creep into your boardroom.

Here are five tips to help you and your firm avoid D&O claims:

1. Follow the Rules

Board members are required to know and understand the company’s bylaws. Make the bylaws available and easy to access for everyone involved. Follow all voting and election policies and procedures.

2. Keep Bylaws Current

Stay on top of any changes and conduct semi-annual reviews of all governing documents. Review any law changes with a lawyer to understand the impact they may have on your organization. Be sure to always have the bylaws memorialized and amended properly to avoid confusion.

3. Hire or Elect Responsibly

Be sure that those who are new to the position know without a shadow of a doubt what their position entails and provide them the training they need to discharge their duties. Require them to read all bylaws before their position begins. Whenever you hire or elect someone new, it would also be a good time to refresh all board members as a group on all of your bylaws.

4. Practice Good Record-keeping

Document board minutes accurately and precisely so that there will be no question as to what was discussed. Record communications with everyone involved with your day-to-day business (members, vendors, insurers, etc.). Keep concise financial records, and always be sure to log complaints and responses for future reference.

5. Stay Professional and Unemotional

Avoid personal conflict and clashing personalities, because not only can these actions lead to future problems, they can also cause you to lose a great deal of valuable time better spent on your core operations. Ensure that all procedures are followed and that every member is heard and respected. Operate like a responsible business and keep it that way.

Though these preventative measures can only assist you in avoiding a claim, the bottom line is that claims will happen, and when they do, having accurate information and all the facts available to give to the insurer is imperative for risk management and a quick resolution of situations and claims. For more information on how to protect your firm from D&O claims, please contact a TechAssure member.

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Six Reasons Managing Risk is Important for Private Technology Firms

TechAssure members help growth companies unlock extraordinary potential by finding ways to use risk management to turn their vision into reality. Risk issues driving the technology industry today are many.

Risk Management for private technology firms is so important for many reasons:

  1. Management’s challenge is to integrate all its relevant information about risk and communicate that information to investor consistently.
  2. Shareholders demand that management adequately identify all material risks facing the organization.
  3. Auditing protocols are beginning to require organizations to report risks in a forward-looking context.
  4. Firms (private and public) are increasingly being held accountable for managing their risks on a portfolio basis.
  5. Failure to anticipate and analyze risk increasingly results in litigation.
  6. Investors favor firms that understand, and manage, their risks.

To learn more about the benefits of working with a TechAssure member, please give us a call at 512-377-9594, xt 700