IPO Readiness

IPO Rocket ship – Getting ready before going public

If you are planning to make your company go public, it’s more than just the prospectus going live on an exchange. The process actually starts 12–24 months before listing with an understanding of the objective behind the IPO. Being self-aware in order to take the most challenging steps to meet the market expectations as a listed company, as lack of preparedness could lead to unforeseen obstacles during the pre- and post-listing periods. Thus, listing requires a well-planned and strategic communication throughout - before, during, and even after the IPO. With decades of experience in assisting companies to go public, trusted consultants help them get ready for a great launch and further on.

Prior preparation benefits?

A thorough preparation will always ensure all the critical aspects are addressed and last-minachievable in the allocated ute hassles are minimized. Proper planning beforehand helps it to make the journey smooth and time frame.

  • Increase transaction possibility in the IPO market.
  • Prepare for pre-IPO and post-IPO phase.
  • Execute IPO phase efficiently.

IPO Journey

IPO process should be a sought out soup-to-nuts strategy, as internal controls to accounting standards and corporate governance, everything comes under scrutiny once the company starts the formal IPO process.

  • Company decision
  • IPO readiness
  • Appoint advisor
  • Preparation phase
  • Submit IPO application
  • CMA review and decision
  • IPO book building
  • Subscription period
  • Listing on exchange

Pre-IPO Considerations

Potential investors always look at various aspects of the company before investing which is a major stepping stone to meet the company’s funding requirements in turn. These range from financial position to management caliber, which needs to be articulated well to present a compelling investment case. A company needs to consider myriad factors and prepare accordingly.

  • Market standing of company’s products and services:
  • Experienced management:
  • Marketing plan for IPO:
  • Right time to go public:
  • Impact of dilution of control of key shareholder(s):
  • Impact on company’s structure, key contracts, and relationships after IPO:

Pre-IPO Activities

For a successful outcome, IPO actionable items should always be reality based and initial planning and preparation are a critical success factor for a smooth execution process. Undertaking assessment before an IPO helps the company identify gaps between market expectations and its current reality. Each market is unique and therefore expectations are different from exchange to exchange and industry to industry. Hence, expert advisors who have worked across the globe know the right approach for companies and could devise bespoke service/modules based on its specific needs. However, there are a few key areas that must be universally addressed by each company.

  • Equity story to improve organizational value
  • Specification on usage of proceeds
  • Optimization and preparation of policies and procedures
  • Execution of corporate governance structure
  • Due diligence of legal aspects
  • Appointment and engagement with lead bankers and other partners

Bridging the Gaps

Pre-assessment will help in getting a clear route for the company to meet the market expectations. Therefore, the next step is to translate the requirements into achievable plans. The company must develop a carefully crafted detailed action plan to achieve those goals. Sometimes, company planners set an unreasonable target for their staff that leads to a higher attrition rate during a crucial IPO process. Therefore, IPO candidates should work with an experienced advisor who will identify the most important issues that need to be resolved and are feasible to be completed before the IPO.

Disclosures in prospectus include

  • Uncertainties related to business
  • Information on how IPO proceeds would be utilized
  • Company’s current and potential dividend policy, along with limitations
  • Its capital structure pre- and post-listing
  • Company’s business model, including revenue and cost drivers
  • Audited financial statements for 3–5 years, along with interim statement
  • Pro forma financial information including important and recent transactions or events, such as convertible debentures, that could impact number of shares on closing date of IPO
  • Management discussion and analysis

Due diligence procedures

  • Conducted by the underwriters’ counsel and includes a comprehensive analysis of the company and its management
  • Ensures the prospectus contains no misleading statement, omission, or inconsistency of any information.

Preliminary prospectus

  • Prepared by the lead underwriter to the interested investors to form an underwriting syndicate in order to apportion the shares.

Negotiation, signing of underwriting agreementPreliminary prospectus

  • Final offer price negotiated and determined, along with the underwriter’s discount and net proceeds to the issuer
  • Final price dependent on various factors such as the company’s historical performance, market conditions, and timing the market for an IPO and level of interest among investors

How an Advisor Helps During IPO Journey?

A detailed self-assessment will enable the company to determine if going public is a step in the right direction. If so, the company can start preparing for the IPO. It’s not feasible for companies to manage the whole IPO process themselves without impacting their core business because of the time and effort it requires. Moreover, as the IPO process represents an unchartered territory for most companies, hiring experts throughout the process would be beneficial both from a cost and time perspective.

  • Conduct a detailed analysis of the company’s financial health and identify other viable alternative funding opportunities
  • Advice on best practices and business processes
  • Streamline financial reporting procedures to fit the restructured reporting structure
  • Realign with accounting standards
  • Advise on group restructuring exercise as per the company’s needs such as overseas expansion, handling exposure to foreign taxes and duties