Identify Dd Request List Issues Scenario 02

Skill: Identify Issues in DD Request List — Pre-IPO Due Diligence (Scenario 02)

1. Subject-matter triage

• Treat the assignment as a diligence-gap review of an underwriters’ document request list against the company profile, cap table, IPO timing, and regulatory correspondence.
• First map the source set into issue clusters: corporate structure, capitalization, material agreements, regulatory history, disclosures implicated by the business, and any entity wind-downs.
• If multiple subsidiaries, entities, or regulatory events appear in the materials, enumerate them before analysis and assess each separately rather than collapsing them into one generalized diligence point.

2. Failure modes the skill is correcting

• Missing a request because the diligence list names broad categories but omits the documents needed to test a specific factual problem surfaced by the company profile or cap table.
• Treating a dissolved subsidiary as a generic corporate cleanup item instead of a distinct diligence risk requiring proof that dissolution was legally completed.
• Failing to adjust the request set for the dissolution jurisdiction, where different formation jurisdictions can impose different filings, consents, tax clearances, or closing certificates.
• Describing a core IP license as merely another contract instead of recognizing that a foundational license can drive the disclosure burden across business description, risk factors, and use-of-proceeds.
• Overlooking regulatory correspondence that reveals a clinical hold or hold history, even if the hold was lifted, and therefore missing a material disclosure and diligence issue.
• Writing a memo that identifies gaps but does not close each one with consequence, source cross-check, and a concrete recommendation.
• Using vague priority language without an explicit severity scale.
• Failing to tie legal observations to the controlling rule, regulation, or recognized disclosure convention.

3. Legal frameworks / domain conventions that apply

• Pre-IPO underwriter diligence is driven by the need to test the accuracy and completeness of disclosure under the Securities Act of 1933, Section 11, and the related liability regime for offering materials.
• Public-company disclosure conventions under Regulation S-K and Regulation S-X inform what facts are material enough to warrant diligence requests, even at the draft registration-statement stage.
• A request list should be calibrated to the company’s specific facts: structure, assets, regulatory status, and any event history that could affect material disclosures or risk allocation.
• Dissolution diligence for a terminated subsidiary commonly implicates the corporate law of the formation jurisdiction, the applicable filing statute, tax-clearance or final-return mechanics, and any law governing winding up and cancellation.
• Clinical hold history is a material FDA regulatory event; the relevant diligence frame includes the Federal Food, Drug, and Cosmetic Act and FDA clinical-investigational regulations governing hold, suspension, and correspondence.
• A core product license may be a material contract under Securities Act disclosure conventions and Regulation S-K Item 601; diligence should examine scope, term, exclusivity, sublicensing, diligence obligations, milestone economics, termination rights, and change-of-control consequences.
• Where the source documents identify a specific authority, mirror that authority at the same level of specificity; otherwise cite the controlling statute, regulation, or standard convention that supports the requested diligence.

4. Analytical scaffolds

• Start from the company profile and cap table, then check whether any entity has been dissolved, wound up, or removed from the structure chart.
• If a dissolved entity exists, test whether the request list asks for the documents that prove legal effectiveness of dissolution; if not, identify the gap and specify the categories of records needed.
• Then determine the jurisdiction of formation for each affected entity and ask whether the request list captures that jurisdiction’s closing requirements rather than a generic “dissolution documents” bucket.
• Review the FDA email chain for any clinical hold, partial hold, suspension, or similar regulatory interruption; if present, assess whether the request list asks for the correspondence, the basis for the hold, and the company’s response.
• Identify the foundational IP license by reading the business description, product summary, and contract index together; then assess whether the request list asks for the license package and the diligence points that matter to disclosure.
• For each gap, state: what is missing, why it matters, what source fact triggered the issue, and what additional document requests should be added.
• If a source fact does not support a gap, say so briefly and do not force an issue.
• Keep the analysis tied to the actual IPO timing, because diligence requests should be prioritized for facts that can affect the registration statement or underwriting sign-off before filing or pricing.
• Use an issue-by-issue reasoning structure so each item can stand alone and be actioned by counsel or the business team.

5. Vertical / structural / temporal relationships

• Treat the company profile, cap table, and regulatory correspondence as vertically related inputs: an entity shown in the cap table may require proof in the corporate records, and a regulatory event may require corroboration in the disclosure draft.
• Reconcile across time: formation, operation, dissolution, hold initiation, hold lifting, and IPO milestone are different temporal states and should not be treated as interchangeable.
• If a subsidiary was dissolved, distinguish between the fact of dissolution and proof of completion; the diligence request should cover the winding-up record, not just the board action.
• If a clinical hold has been lifted, the history remains relevant; request both the underlying correspondence and the resolution materials because the history may still affect risk disclosure.
• If the core IP license predates the IPO and supports the principal product, it should be treated as a disclosure driver that can affect multiple parts of the registration statement, not just the contract summary.

6. Output structure conventions

• Write a prioritized issues memorandum suitable for a Word document.
• Define an ordinal severity scale once at the top and apply it uniformly to every issue entry.
• For each issue, include: severity, concise issue title, the missing diligence item, why the omission is material, the authority or convention supporting the request, the source fact that triggered it, and the recommended additional requests.
• Close each issue with the practical consequence for the issuer, the underwriters, or the offering process.
• Use separate entries for distinct gaps; do not bundle dissolution, jurisdiction-specific closing requirements, clinical hold history, and foundational IP license diligence into one generic point.
• Include a short summary table that groups proposed additions by diligence category and severity.
• End with an explicit Recommended Actions block that assigns each recommendation to a role and ties it to the IPO timeline or other source-based urgency.
• Keep the memo focused on additions to the request list, not on rewriting the underlying diligence narrative.