Louis Lehot discusses the return of IPO window for tech companies
Industry: Legal Services
We asked Louis Lehot, a Silicon Valley-based lawyer who works with public and going-public companies, about the IPO process.
Palo Alto, CA (PRUnderground) July 28th, 2020
Louis Lehot is positioned to provide tailored legal advice that is practical, commercial, and cost-effective for his clients. His firm L2 Counsel, P.C., also specializes in assisting innovative venture capital, growth equity and private equity investors in deals of all sizes, from early stage angel or seed round financing to IPO and beyond.
As we hit the midpoint of Summer 2020 and well into the global pandemic, the window for tech IPO’s has surprisingly sprung wide open. Companies who shelved their IPO plans in the early days of Covid-19, in anticipation of a worldwide downturn, are rushing in, full speed ahead as countries reopen their economies. While a company is selling shares to the public, it is a badge of honor. However, it comes with its share of costs.
We asked Louis Lehot, a Silicon Valley-based lawyer who works with public and going-public companies, about the IPO process. Louis Lehot is a widely recognized expert in tech IPOs and the founder of boutique law firm L2 Counsel, P.C.
According to Louis Lehot, the first task for any company when the word “IPO” gets mentioned is to carefully assess whether its business model, growth prospects, and management team are ready for the scrutiny, disclosures, expense, and discipline required to get registered and thrive in public markets. Counterintuitively, the most important question to ask yourself is, are you certain you want to be a public company?
Second, according to Louis Lehot, is your financial house in order? Many late-stage private companies have gone through an audit for several years, and think that they are ready for public scrutiny. Be sure that you have an audit firm that has recent IPO experience. Louis Lehot suggests that as a public company, your previously audited financial statements will likely be re-audited by the auditors’ IPO team.
Have you engaged with counsel, advisors and investment bankers that know how to navigate the IPO process? Louis Lehot noted that your company will need a seasoned team to execute an IPO on optimal terms. You should hire a law firm with attorneys that have previously taken companies public in your industry and geography and have relationships with your auditors and investment bankers.
Do your governance, management, and compensation structures make sense? Both national securities exchanges, said Louis Lehot, will require an independent majority board of directors, and new rule-making, institutional investor sentiment, and public opinion demand diversity. Louis Lehot considers this as an opportunity to reset employment arrangements, compensation arrangements, and importantly, a time for individuals to do smart personal financial, estate, and tax planning.
“These are only some of the most important considerations that all going-public companies will need to consider,” says Louis Lehot. Others include documenting and ensuring the confidentiality of customer and supplier arrangements if possible, tax planning, resolving legal disputes, and more, Louis Lehot further added.
Fasten your seatbelts. The tech industry IPO has returned…
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Louis Lehot is a partner and business lawyer with Foley & Lardner LLP, based in the firm’s Silicon Valley, San Francisco and Los Angeles offices, where he is a member of the Private Equity & Venture Capital, M&A and Transactions Practices and the Technology, Health Care, and Energy Industry Teams. Louis focuses his practice on advising entrepreneurs and their management teams, investors and financial advisors at all stages of growth, from garage to global. Louis especially enjoys being able to help his clients achieve hyper-growth, go public and to successfully obtain optimal liquidity events. Prior to joining Foley, Louis was the founder of a Silicon Valley boutique law firm called L2 Counsel.