Global IPO volumes are significantly down on the post-pandemic IPO boom of 2021, and the current headwinds of market conditions, increasing interest rates and high inflation persist. No one, however, has a crystal ball, but the IPO market will open, the question is when?
If 2024 sees the return of IPOs, then how do you ensure that you can take advantage of the window when it does open and have an attractive enough investment proposition to stand out from all other investment opportunities available to investors?
The answer? Preparation is key.
Readiness for an IPO
So what are the first steps to be taken to prepare for such a transformational corporate event? IPOs can take many months to execute and those businesses who fail to adequately provide sufficient time and resources to prepare for the next stage of the company’s development are more likely to face delays and frustrations in the execution of the transaction, as well as significant challenges to overcome once on the market.
Those companies who have assessed their readiness for the IPO transaction and for life on the public markets and actioned what they need to do to get their ‘house in order’ in an appropriate timeframe are more likely to achieve a successful IPO. You will know if you are on the right track for preparation if you are acting as though you are a public company in the year, or even years, ahead of the IPO.
On the one side, the IPO process is inward looking – it includes a significant project management exercise and will require the management and execution of multiple workstreams across several aspects of the business. As businesses look towards the public markets, instilling a culture of financial discipline, reporting and corporate governance is key. Areas of focus include:
- Financial track record
- Corporate structure and deal structure
- Advisers
- Reward and remuneration
- Project management
- Financial reporting
- Board composition and management team
- Tax
- Investor and other stakeholder relations
- Governance
All the above introduces additional demands on business resources, potentially preventing management from sustaining their level of focus upon the underlying business, especially the CFO and finance team.
Then there is the more outward looking workstream – ‘selling’ or ‘marketing’ the company to potential investors for which you will need to define a robust and compelling equity story which is completely aligned with the future strategy and business plan of the company. This essentially sets out the clear reasons and financial characteristics as to why investors should invest in your business. ‘Early look’ meetings with investors can take place up to 12 months in advance of a planned IPO and can help in refining the positioning of the company and the messaging.
The team
An IPO process is daunting, so don’t be afraid to ask for advice and support. There is a wealth of knowledge and experience amongst the capital markets advisory community, and you will need to engage with investment bankers, accountants, and lawyers, as well as other specialist advisers, to advise and support you through the entire process. All will have excellent credentials, yet it is vitally important you choose those who not only truly understand your business, but also those advisers who you get on with and trust.
However, the advisers you appoint make up only part of the team. What is more important is having the right management team in place, not just for the transaction, but also from an investor and wider stakeholder perspective. Investors will be looking for an experienced and credible management team who work well together and who are able to take the business forward, as well as deliver value for shareholders.
Prepare, prepare, prepare
You can never start too early – if you are well prepared you will more likely achieve a successful IPO and you will be set to thrive as a listed company. The day you ‘ring the bell’ at the stock exchange might mark the completion of a successful transaction and culmination of many months of hard work, but it is only the beginning of the next stage of your company’s development.
How can we help?
Having successfully taken businesses through the IPO process, the experience within the CFPro team gives you the assurance that you will have the senior finance support necessary to guide you as we sit alongside your team to ensure all critical workstreams are achieved.
With CFPro by your side, you will have the people and experience to help you prepare for and execute your IPO and beyond as a public company.