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Pre IPO

Getting Ready

Set yourself up for IPO success by leveraging our expertise and experience

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.

An IPO is a transformational event for any business, and you need to be ready to deal with the additional demands and scrutiny that being a public company brings.  Executing an IPO is challenging and key to its success is ensuring that you are fully prepared and have sufficient time and resource to dedicate to managing the process, as well as operating the business as usual.

IPO preparation – areas of focus

Availability of audited three year track record under IFRS 

Acquisitions or disposals

Private vs public company reporting

Determine legal entity to be floated and its location

Assessment of legal, tax & accounting impact of any group reorganisation/ restructuring

Availability of distributable reserves if pursuing dividend policy

Primary and/or secondary offering

Investment bank/Nominated Adviser (AIM)

Auditor / Reporting accountant

Lawyer (issuer & bank)

Financial PR Registrar

Research Analyst

Impact of IPO on existing incentive arrangements

Executive remuneration structure and policies

Long term incentives

Internal project team experience

External advisers

Dedicated IPO project manager

Finance team, resources & experience

Financial reporting processes

Availability of timely management information &

KPIs Availability of budgets and forecasts

Board composition, diversity and independence

Skills, expertise and experience of management team

Post IPO roles and responsibilities

Tax compliance and efficiency

Transfer pricing

Effective tax rate

Tax impact for shareholders and key individuals

Investor Relations team/officer

Communication plan

Corporate website

External advisers

IT strategy

Systems

Cyber security

IT team

The IPO process will require the management of multiple workstreams, and 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.

With CFPro by your side, you will have the people and experience to assist you prepare for and execute your IPO.

When is the right time?

With increasing regulation, potentially higher valuations achieved privately and alternative sources of private funding being increasingly available, the motivation to IPO may well be reduced. However, there will likely come a point in a company’s lifecycle, when joining a public market may be the natural next step.

Ultimately this will depend on overall market conditions and whether there is institutional investor sentiment about particular sectors and their appetite for new issues.

Management teams will have to consider whether the business has reached the stage in its lifecycle when it is ready to go through an IPO process and become a public company, as well as understand other factors such as company performance, management time and resources that may well impact on the timing of any IPO.

Evidence shows that IPOs can take many months to execute but when a company is prepared for an IPO, it has a greater ability to achieve a successful transaction and valuation.

Choice of market

One of the earliest decisions the management team will have to make is the market on which to list your company. Stock markets are increasingly international, and where an IPO on a company’s domestic market is the route chosen by the majority of businesses, listing on an international market is increasingly common.

Some key factors to consider include:

We have supported numerous companies with their IPOs on the London Stock Exchange’s markets. London, unlike other exchanges, has a choice of markets for companies at different stages of their growth cycle, namely AIM and the Main Market, which includes its High Growth Segment. AIM in particular offers a regulatory environment more suited for small and mid-sized growing companies and has taxation advantages relating to EIS and Inheritance Tax.

We have set out below the key eligibility requirements and continuing obligations for each of the London Stock Exchange’s (LSE) markets.

London Stock Exchange Main Market
AIM
Premium
Standard
High Growth Segment
Domicile
Any
Any
UK or EEA incorporated.
Any
Adviser
Sponsor needed at admission and for significant transactions.
No requirement.
Key adviser at admission required.
Nominated adviser and broker required at all times (Nomad)
Admission document
Prospectus and eligibility letter to FCA.
Prospectus to FCA.
Prospectus to FCA; Eligibility letter to LSE.
AIM Admission document to LSE; Nomad must submit a letter of suitability to LSE.
Minimum free float.
10%
10%
10% minimum value of £30m.
No minimum number of shares to be in public hands; nomad assessment of appropriateness.
Financial eligibility test.
3 year revenue earning record for not less than 75% of the business, and have controlled the majority of assets in this period.

Main activity must be an independent business.

Financial information must be presented under IFRS.

Minimum market capitalisation threshold of £30m.

Financial information required for 3 years, or such shorter period as the issuer has been in operation.

Financial information must be presented under IFRS.

Minimum market capitalisation threshold of £30m.

At least 20% on a CAGR basis over the prior 3 financial years.

Financial information must be presented under IFRS.

Financial information required for 3 years, or such shorter period as the issuer has been in operation.

Financial information prepared in accordance with IFRS, or company legislation if not a parent. If not incorporated within EEA, US GAAP, Canadian GAAP, Japanese GAAP or Australian IFRS permitted.

Audited history
3 years of audited financial information.

Interim audited financial information if prospectus dated more than 6 months after the last audited year.

3 years of audited financial information if available ending no later than 18 months (if audited interims included) or 15 months (if unaudited interims included) before the date of the prospectus.
3 years of audited financial information if available.

Unaudited interim information (with comparatives) is also required if audited information is more than 9 months old.
3 years of audited financial information if available.

Unaudited interim information (with comparatives) is also required if audited information is more than 9 months old.
Reporting Accountant diligence
Long form report.

FPPP report.

Working capital report.

Comfort letters.

Review of proforma and profit forecasts, if included.
Comfort letters.

Review of proforma and profit forecasts, if included.

Other financial due diligence workstreams depend on the requirements of the underwriters and lawyer and would typically include a FPPP report and working capital report.
Long form report.

FPPP report.

Working capital report.

Comfort letters.

Review of proforma and profit forecasts, if included.
Long form report.

FPPP report.

Working capital report.

Comfort letters.

Review of proforma and profit forecasts, if included.
Working capital statement.
Statement by the issuer that there is sufficient working capital available for the group’s requirements for at least the next 12 months.
Statement by the issuer that there is sufficient working capital available for the group’s requirements for at least the next 12 months.
Statement by the issuer that there is sufficient working capital available for the group’s requirements for at least the next 12 months.
Statement that the directors have no reason to believe that the working capital available to it or its group will be insufficient for at least 12 months.
Indices
FTSE UK series, where eligible.
Not applicable.
Not applicable.
FTSE AIM series, where eligible.

Our specific IPO support covers:

Prepare - Prepare - Prepare

As businesses look towards the public markets, instilling a culture of financial discipline, reporting and corporate governance is key. Please contact us for further information on how CFPro can help you.