September 26, 2012

Last time I did a post that described the key documents that you should obtain and review before you get start a relationship with a new client.  Just as important as collecting the information is making sure that you try and put everything in some sort of organized context so that you can go back and review the materials again as needed and also reconfigure the information in a way that allows you to begin developing a picture of how the client operates it business and carries out its legal and other compliance activities.  One obvious thing that needs to be done is the creation of a filing system for the documents; however, in this post I wanted to cover a couple of other ideas that you should consider.

First, as you’re going through all the public documents and/or proprietary business plans that are not distributed outside of the company you should develop you own “executive summary” that includes the information that will be most essential to your activities and which you will need to know as you are speaking with executives, managers and outside business partners.  Some of the information you will need includes the following:

  • The major current product lines of the company and the domestic and foreign markets in which the company is actively selling and promoting those products;
  • Key new product or service development areas and the projected geographic and customer-defined markets for such products or services;
  • Indicators of historical and projected financial performance for the company as a whole and for specific business units;
  • The current capital structure of the company including issued and outstanding shares and shares reserved for issuance upon exercise of options, warrants and other convertible securities;
  • Schedules for shareholder and board meetings (including meetings major board committees such as the audit and compensation committees) as well as for regular management meetings within the company (e.g., weekly or monthly meetings of the heads of various business units); and
  • Contact information for board members, senior executives and key managers.

As you are putting together your executive summary you should take a shot at creating your own short description of the historical development of the business including key milestones such as the release of new products and services, creation or dissolution of major business units, acquisitions and divestitures, and changes in senior personnel.  Getting a sense of how the company has evolved over the last few years provides valuable context and can give you a better perspective on why the company operates in specific ways.

Another thing you should do while you are getting up to speed is try and review comparable publicly available information on the company’s competitors.  For example, you should obtain the periodic reports and proxy statements of other companies active in the company’s markets to get an idea of how they view the overall business environment and the steps they have taken within the last few years to build, contract and change their businesses, products and services.