Although it may differ, this list provides a general information on Security offerings due-diligence. The Security Acts requires information of a registrant to be complete and accurate. To ensure accuracy, the offering documents must contain truthful and non-misleading statements. Failure to do so may lead to litigation of falsification information.

Underwriters and legal teams usually begin their due diligence process with a checklist tailored to the industry of the registrant.  

  1. The business and operational due diligence
  2. Financial and accounting due diligence
  3. Legal due diligence
  4. Bring down due diligence

The Business and Operational due diligence – This phase assesses a company’s growth potential, strategy, infrastructure and other areas of the business. During this initial stage, executives and managers are interviewed and questioned on financial matter, business and operational plans, and relevant issues - Site visit follows post-interview. The Investment banker may also contact certain employees, suppliers, and key clientele to validate information received from the management.  

Furthermore, the advisor must conduct detailed analysis of the company’s competitiveness in the industry and its sustainability against macroeconomic trends.   

The Financial and Accounting due diligence – This part of the process involves verifying and testing the registrant’s capital structure, financial performance, and predicted financial forecasts. The staff also reviews and audits for compliance in accounting policies and inaccuracies in financial statements.  

The Legal due diligence – Attorneys focus on legal records and probable litigations. The legal team certifies that the company is compliant with corporate formalities and application regulations.

The Bring-Down due diligence – Known as the final meeting between all parties to confirm adequate information and finalize the price issuance.

This list is a quick snapshot of the Security offering due-diligence process. We hope that this list offers some takeaways for founders and anyone contemplating this route. 


Romain Ly