Corporate Governance Considerations in Private Equity-Backed IPOs

Summary

This practice note discusses corporate governance matters to be considered in preparing for an initial public offering by a private equity portfolio company. The governance structure of the portfolio company should be modified as necessary to comply with market-driven norms and applicable legal and stock exchange requirements for publicly held companies. Because the private equity sponsor typically retains a majority or other substantial ownership interest in the portfolio company following the completion of the IPO, it is important to strike an appropriate balance between governance elements that are intended to: (1) facilitate the completion of the IPO at an acceptable price and (2) protect the sponsor's remaining investment in the company and facilitate the ultimate disposition of that investment.