Managing the due diligence process for a US IPO
Managing the due diligence process for a US IPO

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Managing the due diligence process for a US IPO
  • Why carry out due diligence?
  • Due diligence defence
  • Standard of reasonableness
  • Who can rely on the due diligence defence?
  • Types of due diligence and responsibilities
  • Timing and process

This Practice Note provides an overview of the purpose, nature and scope of the due diligence process carried out by an offeror prior to the offer its shares to the public in the context of a US initial public offering (IPO). This Practice Note draws attention to the roles of the key advisers who are responsible for conducting due diligence and it also outlines the timing and process of the due diligence phase in a US IPO. Produced in partnership with Thomas France, a partner in the Corporate Transactional practice group of Venable LLP.

Why carry out due diligence?

The due diligence process is one of the most significant and time-consuming aspects of an initial public offering (IPO) as the process comprises a number of different work streams including legal, business, financial and accounting due diligence, each of which may be conducted by different advisers. Limiting potential liability under the securities laws is a principal purpose of the due diligence process, but due diligence also plays a critical role in ensuring the registration statement and prospectus are high quality disclosure and marketing documents, assisting the underwriters to value the company and price the offering, supporting the legal opinions and 10b-5 letters to be provided by counsel for the company and the underwriters, and identifying actions to be taken to prepare the