Would going public be more manageable and low-risk if the right expertise and systems helped a life sciences company move through the process efficiently and established a firm foundation for its future? During our recent life sciences event, “Discovery to Delivery: Maneuvering the Milestones,” Martin Beck, the CFO of UpHealth, and Jim Ingram, Business Development Executive at Sikich, discussed the challenges and complexities of life sciences organizations that aim to go public. When UpHealth went public, it followed a special purpose acquisition company (SPAC) approach, supported by expert guidance and powerful technology.
Why decide on a SPAC transaction vs. IPO process?
When UpHealth was still privately held and growing very quickly, it needed to find ways to fund and continue this growth. Discussions with private equity companies and a comparison of a traditional IPO compared to a SPAC model made it obvious that an accelerated launch with a SPAC partner would best suit UpHealth’s objectives. A SPAC launch would give the company access to capital markets much faster than a conventional IPO could accomplish.
UpHealth is a global digital health services company that aims to provide technologies and services to empower patients and care providers to come together in a personalized, frictionless care experience. The company delivers an Integrated Care Management Platform and also offers solutions in such areas as global telemedicine, tech-enabled behavioral health, and digital pharmacy services. Its clients include healthcare providers, health plans, community organizations, and governments. Please note that UpHealth is not a Sikich client.
In choosing a SPAC entity to work with, UpHealth leadership felt it was critical that their stakeholder partners could offer experience and guidance in managing a successful go-public initiative with a SPAC structure. Once the company signed an agreement with a SPAC, completing the reverse triangular merger and launching UpHealth as a publicly owned organization took only seven months. Since UpHealth’s SPAC transaction in 2021, the company is traded on the New York Stock Exchange.
Expertise helps thread the needle
An important advantage of the SPAC process for UpHealth was gaining funding not just quickly but also in a more predictable manner than it could have done through a more traditional IPO. As Beck explains, the expertise of people who had previously managed companies going public through a SPAC was invaluable in the success and risk mitigation of the effort. He recommends that companies considering this route collaborate with the most experienced advisors, legal and finance experts, and technology consultants they can find.
When it comes to technology systems, companies going public often need to transition away from more entry-level to more powerful software like an ERP system in order to gain the visibility and control they need. A consultancy’s life sciences and financial industry expertise in addition to advanced technical capabilities can make a big difference in achieving a fast, problem-free ERP deployment.
Minimizing the risk of going public via SPAC
Going public through a SPAC requires managers to provide more forward-looking, realistic projections than an IPO would demand. Beck cautions that the newer SPAC approach is less tested and established than the IPO journey, and companies need to understand and navigate a large number of important process elements. They also need to be aware of the differences in IPO and SPAC investor bases. A traditional IPO could allow a company more control over its initial investor base. In contrast, a SPAC comes with a built-in investor base that usually changes between the announcement of the launch and the actual transaction, and then again following the go-public date. Skilled guidance can help companies determine which is more to their advantage.
No matter whether a business goes public through an IPO or by means of a SPAC, it needs to assess the readiness of its financial and reporting processes to function as a public company. At a minimum, that means compliance with all applicable regulatory mandates and full transparency of financial processes with the ability to provide complete audit trails. UpHealth, like many other companies, relied on basic productivity software like QuickBooks early on, but soon realized that this would not help meet auditing requirements, implement segregation of duties, or ensure regulatory compliance.
Technology to streamline processes and maintain the growth momentum
Sikich has supported many life sciences organizations as they updated and strengthened their systems and processes and then launched as public companies through an IPO or SPAC event. Beck and Ingram agree that it’s best to make strategic technology planning decisions as early as possible. Sometimes that means implementing an ERP system when companies and their finance teams are still quite small. But creating a strong technology foundation early on can greatly ease the go-public process and other business activities in a fast-growing life sciences company.
Usually, the Sikich team deploys a NetSuite ERP solution that is optimized and preconfigured for the typical requirements of life sciences companies. Because these organizations typically need to move at a fast pace and time is of the essence, the Sikich consultants have mastered the art of completing successful NetSuite implementations in as little as 30 to 45 days. Our NetSuite projects can be equally efficient before or after a company has gone public.
Sikich aims to keep ERP engagements predictable not just in terms of process and outcomes, but also within the budget parameters of life sciences clients. The consultants know how to keep licensing costs under control, and managed services for ongoing technology management as the company evolves always come with a predictable cost. As life sciences companies mature and their requirements change, Sikich can help them add technological capabilities—such as Salesforce for managing key relationships—and maintain their momentum without adding needless complexity to their operating environment.
Here to help
Sikich is proud of many long-standing relationships with life sciences clients. We provide solutions such as NetSuite, Coupa, and Trackwise, optimized for industry requirements, and deliver a broad portfolio of services, from regulatory, quality and compliance, technology management, to cybersecurity and strategic consulting.
To explore how engaging with Sikich could help your life sciences organization, you can:
- Read other recent life sciences blog posts.
- See how Sikich supports the life sciences industry.
- Contact Sikich.