Getting an SME IPO means the company’s books and records are going to be looked at very closely, probably the first time ever. After the merchant banker has been appointed, the legal counsel, statutory auditors and other advisors get involved in the due diligence phase and they all have expectations that the company would have documents which are complete, consistent and easy to access. It is possible for the delay to be a very big problem if a company only starts collecting such records when the first checklist of documents is handed over to it.
A well-organized data room tackles this very problem at the start. It not only saves the time required for due diligence, but also minimizes the number of follow-up questions and ensures timely progress of the matter. We recommend that promoters and finance personnel have the following points implemented before commencing due diligence
1. What a Data Room Actually Is
It’s a secure online folder, usually on a virtual data room platform, where every document your advisers need sits in one place. The merchant banker, IPO consultant, legal counsel and auditors all pull from it. No more emailing PDFs around with names like “final_v3_REAL”.
Set it up before anyone asks, and pick one person on your side to own it. Usually that’s the CFO or the company secretary. If three people upload in three different ways, you end up with duplicates and nobody knows which version is current.
2. Corporate and Ownership Records
We usually start here, because gaps in these records take the longest to fix. You’ll need:
- Certificate of incorporation and every name change certificate
- MOA and AOA, with all amendments
- Statutory registers for members, directors and charges
- Board and shareholder minutes, ideally from incorporation onwards
- Share allotment and transfer records, with the forms filed with the RoC
- Current cap table and shareholding pattern
Check that your cap table matches what the RoC records show. If it doesn’t, find out now. A missing allotment filing from years back can take a while to rectify, and it can’t be fixed quietly.
3. Financials and Tax
The auditors will try to tie your books to your GST returns and bank statements. If the numbers don’t reconcile, they’ll ask why, and it’s much better when you already know the answer. Keep ready:
- Audited financial statements for the track record period
- Management accounts for the stub period
- Bank statements and loan sanction letters
- Income tax returns, assessment orders, GST and TDS filings
- Debtor and creditor ageing
- Financial modeling files with projections, assumptions and version history
Make sure your statutory auditor holds a valid peer review certificate, because the restated financials need one. Also write a short note for anything unusual, like a one-off write-off or a sudden jump in revenue. It saves a lot of back and forth.
4. Licences, Approvals and Compliance
Collect every licence and registration the business runs on. Factory and trade licences, pollution control consents, FSSAI or drug licences if they apply, shops and establishment registrations, PF, ESI and professional tax. Add proof of renewal for each.
Go through the expiry dates one by one. An expired licence that nobody noticed is one of the most common findings we see in due diligence. Also check that each one is in the current legal name of the company, especially if you converted from a partnership or changed your name along the way.
5. Material Contracts and Key Relationships
Pull together your top customer and supplier agreements, lease agreements, loan documents and any distribution or JV contracts. Add agreements from earlier fundraises, acquisitions or restructurings too, since your transaction advisory team will want to trace how the current ownership came about. Read them for change of control clauses and consent requirements. Some lenders and large clients need to be told, or need to approve, before you go public. Ask for those letters early, since they won’t reply on your schedule.
This is also where customer concentration shows up. If one client makes up a big share of revenue, expect questions. Have the contract and the history of the relationship ready.
6. Litigation, Disputes and Contingent Liabilities
Make one clean list of every case, notice and dispute involving the company, promoters, directors and group companies. Tax matters, labour cases, consumer complaints, cheque bounce cases, all of it. For each one, note the forum, the amount, the current status and who is handling it.
Don’t leave out something because it feels small. A minor case that you skipped and the lawyers find later does more damage than the case itself.
7. Promoters, Related Parties and Group Entities
Related party dealings get a lot of attention. Prepare:
- Promoter KYC and background details
- List of related parties and every transaction with them
- Loans to or from promoters and directors
- Financials of group companies
- Details of any pledge on promoter shares
If you’ve been routing business through a relative’s firm, or the company lent money to a promoter, write down why, on what terms, and whether it’s been repaid. Clean it up before filing if you can. If you can’t, at least be ready to explain it.
8. People, IP and Property
You should maintain a list of essential management executives along with their employment agreements, and you have to keep ESOP records if a plan has already been implemented. The grant letters, vesting schedules, board approvals and the valuations must be kept on files, and if it was an informal scheme, a consultant for ESOPs would probably help. You need to bring together things like trademark registrations, ownership of websites along with licenses for copyright for your IP. With your property assets, title deeds, lease agreements, and change of ownership are the documents you will want to keep. Land title issues typically take a lot of time to resolve, so it’s really recommended that these sorts of matters be identified and addressed as early as possible.
9. How to Structure the Folders
If we were you, the best approach is to leave all things simple and dull. Make use of numbered folder headings which match the list of due diligence request folders: corporate, financial, tax, compliance and licences, contracts, litigation, promoters and directors, HR, IP, and property. Date file names as well as descriptive file names. In a front document, there should be an index for every document, showing its status and who last uploaded it. Advisers do not have to go through all documentation but only to the parts which are needed for their jobs. Also, make sure to enable the activity log so you will know who looked at which document.
Common Mistakes to Avoid
- Uploading unsigned drafts instead of executed copies
- Scans that are crooked, cut off or unreadable
- Documents sitting in one person’s personal inbox and never making it to the data room
- No index, so advisers keep asking where things are
- Treating the data room as a one-time task and not updating it when something changes
How ASB Growth Ventures Can Help
At ASB Growth Ventures, we run data room readiness reviews before due diligence begins. We go through your documents against the standard request list, flag the gaps, and help set up the structure so your team isn’t scrambling when the real requests arrive. If an SME IPO is on your plan for the next year or so, we’d suggest having that conversation early.
This work is tedious but doable, and it’s far easier when no deadline is looming. Start with the corporate records, work your way down the list, and your merchant banker will thank you for it.