The process of taking a company public is complicated, whether you’re announcing an initial public offering (IPO) or merging with a special purpose acquisition company (SPAC). For many organizations, going public is just the first of many steps in executing a business expansion strategy. Often, one of these additional steps involves a merger or acquisition.
In Mercer’s recently released Delivering the Deal: The Unrealized Potential of People in Deal Value Creation, 750+ business leaders and deal professionals emphasized the importance of getting the people elements right. In going public, equity plans are traditionally the sole people-related focus. While an essential component, equity plans aren’t the only workforce issues to consider. The key to creating the desired long-term value lies in addressing a set of broader people considerations.
How ready is your organization to go public?
1. Equity plan optimization
2. Human capital due diligence
Business leaders often wonder why it’s necessary to perform due diligence when going public. In the case of an IPO, it’s critical to have confidence in two factors. The first is whether your human capital platform (programs and delivery) is competitive in a public company forum. The second relates to the potential for “fast follow-on” mergers and acquisitions post-IPO. These deals will struggle to create value if the platform is flawed.
In a SPAC merger, it is important to analyze all human capital programs from a finance perspective — for example, developing cost estimates to validate or identify differences in calculations provided by the target. In addition, the SPAC founders need to uncover and understand any potential incremental cash or P&L charges. And when the goal of the initial SPAC merger is to create a platform for additional bolt-on acquisitions, undertaking broader human capital due diligence is also a best practice.