PwC's "Initial public offerings: When governance becomes a red flag," identifies some of the most common corporate governance "red flags" potential investors worry about in connection with pre-IPO companies, and suggests ways in which those companies may reduce those concerns. Among the chief concerns addressed are dual or multi-class share structures, "imperial" CEOs, non-diverse boards, related party transactions, and other hotly debated governance practices such as classified boards, the absence of independent board leadership, and low director re-election vote standards.
The firm emphasizes that while governance practices are not usually sufficient in themselves to divert a planned offering, poor governance practices can hamper the process and increase the probability for negative media attention.
See our prior reports: "Board Diversity at IPO Companies," "Corporate Governance & Other Practices: IPO Companies," "Benchmarking Unicorn IPO Practices," "Pre-IPO Corporate Governance Practices Benchmarked," and "Corporate Governance Practices: IPO Companies"; Skadden/Deloitte's "Strategies for Going Public: A Step-by-Step Guide to the IPO Process"; and additional resources on our IPOs and Board/Governance Practices pages. This post first appeared in the weekly Society Alert!