Biotech IPO Checklist, Part 2: Planning for Growth & Digital Transformation
For companies in the biotech and life sciences industry, the IPO landscape is often wrought with complexity and can lead to stumbling blocks and disappointing results.
We previously outlined several considerations for companies to review before reaching the IPO stage – including necessary compliance and financial reporting requirements as well as leadership and talent initiatives. Below, we explore additional priorities for companies contemplating an IPO, notably – how can they plan for future growth and transformation?
Plan for the Long Haul
Remember, this process isn’t just about completing paperwork, raising capital, and listing on the stock market.
An IPO is not the end, but the beginning of a company’s journey to its ultimate goal: innovating patient care by bringing its therapy to market.
A company’s long-term plan for growth may involve domestic or international expansion, or strategic partnerships. Each of these goals requires evaluation and input from experienced individuals in relevant areas such as due diligence, tax planning, international tax, state and local tax and accounting.
|Understanding How Growth Impacts Total Tax Liability
As a company expands domestically or internationally, tax considerations become more complicated. Organizations should take the time to map out and understand their total tax liability across the entirety of the business. This requires having holistic knowledge where tax costs arise across the entire business and developing strategies to address areas that would have the greatest impact to their bottom line. With tax costs dispersed from country to country and state to state, savvy businesses must consider tax from a holistic perspective and aim to develop comprehensive, data-driven solutions.
Long-Term Planning: Internal Assessment
- Is there a plan to bring products to market?
- Is all the necessary IP secured?
- Is there a plan in place for scaling operations domestically and internationally?
- Does the organization have a five-year plan?
- Will the organization pursue a government contract?
- Has the company planned accordingly for the potential loss of funding sources by going public, such as SBIR grants from the NIH?
- Will the organization handle personal health data? Any organization, whether private or public, needs to be HIPAA compliant if it collects public health data.
Re-evaluate Organizational DNA to Plan for Digital Transformation
The IPO journey should set the stage for a successful transition to a public entity, ensuring the organization is poised to sustain long-term growth.
This means considering how to adapt to regulatory, health, and consumer changes, and how to re-imagine the business and operations for the future digital economy. The process of digital transformation is one of a series of deliberate steps to mature the digital capabilities underpinning the desired future state of the business. This process starts with developing — if they don’t already exist — protocols for information governance, as well as establishing threat-based cybersecurity procedures and adopting best practices.
Planning for Digital Transformation: Internal Assessment
- Does the organization have a digital transformation strategy?
- Does the organization have a plan for updating and incorporating new digital tools and technologies into its offerings and operations?
- Does the organization have established protocols for information governance?
- Will the organization ultimately need to become GDPR compliant? HIPAA compliant?
- Is the organization adhering to cybersecurity best practices, and if not, what steps need to be taken to address this?
These questions and considerations will help inform the development of an organization’s long-term business strategy, which will, in-turn, serve as the bedrock for decision-making in the years to come. A thoughtful approach combined with appropriate counsel will ensure an organization is set up to succeed in its IPO.
If you’re considering a future IPO, please connect with MFA to explore unique considerations for your business and let us help set your company up for success.
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