Preparing for an IPO: How to select IPO advisers to take your business public
To help your business achieve a successful IPO, you need a dream team of advisers. This guide covers the advisers you will need and how to find them
When it comes to planning an initial public offering (IPO), it’s crucial to have reliable expert advisers on your side from the outset.
Experienced, supportive and strong advisers will provide guidance on the best IPO strategy for your business and will ensure the process runs as smoothly as possible. The planning involved in an IPO can be incredibly resource heavy and can distract management from the day to day running of the business.
Good advisers will not only assist your business through the initial listing process but will ensure that life as a public company is as plain sailing as possible.
Public companies are rightly subject to greater scrutiny and are held to higher standards than in their previous life, with advisers playing a crucial role in maintaining your business reputation and longevity long after listing day.
But what advisers will you need, and how many of them? What will be their individual roles and how do you find the right team for your business?
The IPO advisers you need to take your business public
A Nomad (nominated adviser) is a corporate finance adviser, approved by the London Stock Exchange. The Nomad is the main adviser to your business during the IPO process and throughout its life as a public company.
You can only list on AIM (Alternative Investment Market) if you have a Nomad appointed, who is often seen as the regulator of the company.
A Nomad is responsible for advising a company on its responsibilities in relation to its admission to AIM as well as its continuing obligations once on market.
A lead broker
This is normally the main underwriter and their role is to administer the activity surrounding your bid to list on the stock market.
They are tasked with issuing the offer document, organising the syndicate and dealing with the allocation and distribution of shares. The broker will also be responsible for the fundraising process and the market test run, which will provide a good indication of how well your company will be received once listed.
A reporting accountant
A reporting accountant also plays a crucial role in the IPO process as they provide certain ‘public' opinions, a requirement of the rules governing capital markets transactions.
Accountants also perform financial due diligence for the company directors and will compile adequate past financial statement reports that will be presented during the bid process.
A lawyer is required to help you navigate the numerous legal requirements involved in the IPO process.
They ensure the legal obligations to the shareholders have been met and that your company isn’t left exposed or liable as a result of listing.
Financial PR adviser
Finally, most businesses appoint financial public relations advisers who help to manage your public relations before, during and after listing.
They help the business to communicate their investment case and future strategy to all external stakeholders – including the media.
How to choose your team of IPO advisers
When it comes to selecting your team of advisers, arguably the two most important things to keep front of mind are:
- The advisers’ experience
- Their reputation
Take time to look at their track record and ask for recommendations from existing advisers and business contacts.
Not only will this allow you to choose advisers who are familiar with your business sector but will also give you an indication of their success in past IPO ventures.
Most importantly, choose advisers who you will be able to work well with and build a strong rapport. As a public company you will always need advisers and the IPO process is a good way to establish long term business relationships for the future – so it pays to be picky and to do your homework!
This article was contributed by chartered accountants and tax advisers haysmacintyre.