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The Journey To IPO

The Journey to IPO

Monday, 22 May 2023

A company choosing to list its shares publicly through an initial public offering (IPO) can be a significant milestone for any company. It is a process that involves offering shares of a private corporation to the public in a new stock issuance and is subject to strict regulatory requirements set out by the UK's Financial Conduct Authority (FCA). In this article, we will take a closer look at the IPO journey, its benefits, and challenges, as well as steps that companies can take to prepare for a successful IPO.

The IPO Process

The IPO process is a complex one, requiring careful planning and execution. It involves a number of key steps, including:

  1. Financial and Governance Readiness Assessment
    Companies must assess their financial and governance readiness and evaluate their business plan to ensure they meet the requirements set out by the FCA.
  2. Team Building
    Companies must assemble a team of experts, including investment bankers, solicitors, auditors, and other financial professionals, to guide them through the process.
  3. Registration with the FCA
    Once a company decides to go public, it must register with the FCA and comply with strict regulatory requirements.
  4. IPO Shares and Pricing
    Companies must determine how many IPO shares they will offer to the public and at what price.

Benefits of Going Public

Going public through an IPO can provide a range of benefits, including:

  1. Exit Strategy
    Going public can provide an exit strategy for early investors and founders who want to monetise their investments.
  2. Access to Capital
    Going public can provide access to new capital and resources to help fund growth and expansion plans.
  3. Credibility and Transparency
    Being a public company can provide a sense of credibility and transparency that can help attract new investors, customers, and employees.
  4. Equity Incentives
    Going public can help a company attract top talent by offering stock options and other equity incentives that can be valuable to employees.

Challenges of Going Public

Going public also comes with its share of challenges, including:

  1. Time and Cost
    The IPO process can be time-consuming and costly, requiring a significant investment of resources and a team of experts to guide the company through the process.
  2. Regulatory Compliance
    Companies must meet strict regulatory requirements, including ongoing financial reporting, governance, and disclosure requirements, which can be complex and demanding.
  3. Public Scrutiny
    Once a company goes public, it is subject to greater scrutiny and public pressure from investors, analysts, and the media.

Our Top Tips for a Successful IPO

To prepare for a successful IPO, companies should take the following steps:

  1. Start Early
    Companies should start preparing for an IPO as early as possible, ideally a year or more in advance.
  2. Assemble a Team of Experts
    Companies should carefully select a team of experts. This will typically include a financial adviser, lawyers and registrars, and will involve working closely with them throughout the IPO process.
  3. Assess Financial and Governance Readiness
    Companies should assess their financial and governance readiness and identify any potential issues that need to be addressed before going public.
  4. Develop a Strong Business Plan
    Companies should have a clear and compelling business plan that outlines their growth strategy and market opportunity.
  5. Build a Strong Management Team
    Having a strong management team is critical to a company's success. Companies should ensure that they have a strong and experienced team in place to lead the company through the IPO process and beyond.