IPO Team Considerations
Once the company has taken on an internal audit, outweighed the benefits and risks off the IPO, if the board approvals they can go ahead with the initial stages assembling an IPO management team. This will include underwriters, lawyers, auditors, printers, sponsors/nomads, advisors, brokers, PR firm and accountants.
The selection of an IPO team can be a long process. It may involve a “Beauty pageant” style selection method. With the company formally inviting the various roles with an invitation to tender. Each role will be approached by various businesses, who will present to the company why they should be given the role, outlining previous experience and why they are a ‘good fit’ for the task.
Once the IPO team has been selected by key management, they can then go ahead with planning the IPO as a collective.
Ensuring that the company has high-quality advisors is vital and should be consider one of the key areas of the Pre-IPO process.
The Investment Bankers/Underwriters role is to ensure the company going through the IPO process adheres to all regulatory requirements. Such as filing the correct documentation, paying the necessary fees and publishing the necessary financial data for the public to see.
The underwriters are also responsible for sourcing buyers of the company’s shares. Then recommending at which price and amounts of shares they company should allocate, based on demand initially received. With the aim to sell all the shares, its makes available.
The IPO process usually involves two groups of lawyers. One would be to advise the company throughout the IPO. Meanwhile the other would focus on the Due Diligence of the Prospectus, review of company documentation and the business itself to identify any legal issues that may arise.
Auditors will assist the company’s CFO to review accounts, identifying any issues and prepare the required documentation as part of the necessary financial reports required for admission. Any accounting issues or comments made by the regulatory authority (i.e. SEC or UKLA), will be addressed to by the auditors. Summarising verification procedures and specific financial information of the company.
The responsibility of the printers is to print the prospectus. The printer should be experienced in printing both registration statements and prospectuses. These documents play a vital role in influencing potential investors and admission authorities. Therefore, it is essential that they look professional and there are no mistakes in the copy.
Listing Sponsor (Main Market – Premium)
The Listing Sponsor is required for floatation on the Premium Main Market under UK Listing Rules. They will lead a team of advisers and delegate roles and task to members of the team. They will also assist on an ongoing basis to assist with regulatory duties during transactions.
Key Adviser (Main Market)
A Key Adviser is required for a company to list on the High Growth Segment of the Main Market. They are responsible for confirming that the company is eligible for floatation.
Nominated Advisor (Nomad – AIM Only)
A Nomad is required as part of floatation of the AIM Market. They need to be part of the initial process as well as during the time the company spends on AIM. The nomad makes the decision whether or not they see the AIM market as the right fit for the company and if so coordinates the listing process. During the process they will advise the company, ensure that it adheres to AIM rules.
The Corporate Adviser is one of the most vital team members necessary for an application to list. They will play a pivotal role in deciding which market best suits the company. They will then formally submit an application on behalf of the company to join the chosen market. An adviser might also advise whether it’s the ‘right-time’ for the company to list, due to market conditions and other economic factors.
Acting as the key group to engage with the chosen floating market. The role of the broker is to assess the current market condition and valuing the demand for company shares. Then market them to investors, attracting the necessary demand to meet company expectations for floating. A corporate broker will need to be experienced in the industry of the company.
The reporting accountant’s duty is to review the company’s financial records. These will be used by potential investors towards the end of the IPO process.
The company needs to ensure it hires a credible financial Public Relations firm, that has a proven track record in successfully raising the profile of companies. The PR firm will assist in getting information in the public domain through the necessary channels and build relationships with potential investors and stakeholders. Developing a strategy for the best approach to reach the necessary people in during each stage of the IPO process. Covering the key areas of public relations, communications and marketing. Choosing the right PR firm can be the difference between a well-followed IPO or under subscription of shares.
The Registrar is responsible for handling shares and shareholders. Finalising the list of eligible applicants for shares. But also managing invalid applications and refund of orders. It’s the duty of the registrar to collect applications from banks, then process, finalise and dispatch share certificates and refund orders.
The listing authority is not part of the internal IPO team but still, plays a pivotal role in the process. They are the independent financial institution, that’s associated with the stock exchange the company intends to list on. Their duty is to process the application of the company, checking for errors or misleading information in the company prospectus. Providing the company with comments where to alter and provide clarification on financial and company information.