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11/11/2020
Post-SPAC transaction: Challenges and benefits of operating as a public company
"Life as a public company is challenging. The target’s management team will be faced with SEC compliance issues, listing regulations of NYSE or NASDAQ, and cybersecurity, governance and reporting issues to name a few." Swami Venkat, CPA, CISA, CFE, ACA, Partner, CFO Advisory Leader, CohnReznick Advisory
- Efficiency, timeliness, and accurate financial close and reporting
- Integrated reporting
- Non-financial reporting – KPI, business metrics dashboards, etc.
- Policies and procedures
- Controls within and across business units
- Potential areas for operational improvement
- Cybersecurity governance and reporting
IT infrastructure
- Scalability and sustainability
- Current infrastructure and integration across applications
- Data retention and retrieval
- Business continuity and disaster recovery
- Internal and board reporting dashboards
- Audit of historical data
- Retrospective and prospective U.S. GAAP accounting and disclosure requirements
- SEC reporting timeline adherence
- Potential tax implications – clarifying tax positions for the registrant, shareholders, and directors
- SEC compliance
- NYSE/NASDAQ listing regulations
- Sarbanes-Oxley (SOX) compliance
- Code of ethics and whistleblower hotline
- Board structure and composition
- Establishing audit and other committees
- Risk identification and mitigation
Operating as a public company comes with distinct challenges and benefits. The primary benefit is the ability to raise capital to drive growth through capital expenditures, reducing one’s debt-to-equity ratio, and funding significant research and development for new products and services. Additionally, continued capital may be available via secondary offerings. The visibility that comes with being a public company can be advantageous in extending companies’ market reach, establishing new customer bases and distribution channels.
However, the growth potential fueled by the capital infusion comes at an operating cost. Public companies are held to significantly greater regulatory scrutiny by the Securities and Exchange Commission (SEC), resulting in a loss of autonomy compared to private companies. Further, they need to strengthen corporate governance to comply with the Sarbanes-Oxley (SOX) Act; face increased financial disclosures requiring more sophisticated financial reporting; and must build a robust IT infrastructure and an investor relations function.
Contact
Swami Venkat, CPA, CISA, CFE, ACA, Partner, CFO Advisory Leader, CohnReznick Advisory
973.871.4044
Marisa Garcia, CPA, Partner, CohnReznick Advisory
646.601.7786
Subject matter expertise
Marisa Garcia
CPA, Partner, CohnReznick Advisory
Swami Venkat
CPA, CISA, CFE, ACA, Partner, CFO Advisory Leader
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This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.