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How To Prepare For An IPO

How To Prepare For An IPO

02 November 2022

By Anne-Marie Clarke, Head of Corporate Governance at EQ Advisory

While the IPO market is experiencing something of a slump this year, activity will begin to pick up as macroeconomic conditions improve.

Anne Marie Clarke Anne-Marie Clarke Head of Corporate Governance, EQ Advisory

There are a lot of highly-anticipated IPOs in the pipeline, with companies keeping a watching brief and waiting for the right moment to go public.

If you are one of these firms, you may be asking yourself what you should be doing in preparation.

It goes without saying, but life as a public limited company is very different to being in private hands.

Going public will generally change not only a company’s shareholders, but also its boardroom.

As a director, you are now more visible and subject to greater scrutiny by employees, customers, investors, regulators and pressure groups.

Therefore, it is vital you lay solid foundations in advance, demonstrating you have put the appropriate structures in place to reassure all stakeholders.

I sat down with Robin Walker, Business Development Director, EQ to discuss just a few of the things you should consider, both pre- and post-IPO, to ensure you start life as a public limited company on the right foot.

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Pre-IPO

The vast majority of your time in the run-up to your listing will be spent ensuring you have the appropriate governance framework in place.

It’s very important that you have the buy-in and commitment from your Chair for your chosen governance framework.

After that, it’s important to employ dedicated, experienced company secretarial support to set out the governance framework for the listing, implement it and embed the processes. Your Chair’s involvement in this process is vital, therefore it helps if they have a good working relationship with the company secretary.

The next stage is to consider the make-up of your company board, which will provide essential leadership and oversight in terms of delivering the strategy.

It may seem obvious, but they need to have the appropriate level of experience and it’s important to have an adequate level of independent oversight, in the form of experienced non-executive directors.

When deciding on your board, consider and, if possible, consult with potential investors to find out what they will expect of you – after all, you need their support on re-election. With that in mind, a clear nomination and recruitment process is important.

Once the board has been selected, think next about your executive remuneration policy, ensuring that it aligns executive director performance with shareholders’ interests and to your workforce.

You will also want to consider how the stakeholders will be incentivised to deliver the strategy you have devised, perhaps through employee share plans, for example.

Post-IPO

A good company culture is paramount for success and it is important your Chair is supported in embedding the right culture and values within your organisation from day one.

You should establish a stakeholder engagement programme to share the purpose and values of the company and to set out the overall strategy. It’s important to use this as an opportunity to develop relationships with your new shareholders. But of course, don’t forget those who were invested before your IPO.

In the early days as a publicly listed company, it’s paramount the Chair shows leadership and places the appropriate levels of focus on governance and processes – this is key as the board establishes itself. It is also vital that the correct level of resourcing has been put in place – both internally and externally – to support the implementation of the governance processes.

After that, it’s about communication – not only with the stakeholder engagement programme, but through regular updates to shareholders and the transparent, and good disclosures within the annual report. Tell an authentic story and build trust to keep investors and other stakeholders informed and supportive of the management of the company.

Embarking on an IPO is no small undertaking. But with the appropriate level of preparation, it can be a success and the culmination of all the hard work you have put into your company to date.

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