Some early-stage, high-growth companies choose to stay private instead of going public in part so that they have the opportunity to grow under the radar without intense scrutiny from securities regulators and the press. However, as Elizabeth Holmes, the founder, chairman and chief executive officer of Theranos, recently learned, staying private does not guarantee that a company will avoid becoming the target of investigative reports by major media outlets or coming under fire from business partners. If a company has not prepared in advance to weather these storms, in the worst cases, a barrage of negative publicity could potentially cripple a company’s ability to operate. As a result, even though private companies do not have the same regulatory compliance burdens as their public company counterparts, early stage companies with high-growth potential may benefit from adopting sophisticated corporate practices that will provide protection in the event they are scrutinized or challenged....
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