Prior to taking the decision to float, the Board should carefully review whether this is the most appropriate option for the company. They should consider their strategic plan for the company and assess whether an IPO represents the best route to achieve it. An IPO is an onerous task, demanding a significant commitment in time and energy from the directors. It is not a decision that should be taken lightly, and we would explain the process and ongoing commitment to you as part of the planning process in order to ensure that you are able to make an informed decision as to the right course of action for you and your business.
As a leading firm of accountants for IPOs on AIM and other markets, with an experienced team of dedicated professionals focused on growing companies, we can provide objective advice in relation to an IPO. In addition to acting as Reporting Accountant, we can consider, with you, the various Equity Markets and introduce you to other professionals, who will be key to the success of the IPO, including Nominated Advisers (Nomads), Corporate Advisers, stockbrokers and lawyers.
The advantages of an IPO include:
- Raising new money to enhance the business;
- Using marketable securities for acquisitions;
- Allowing existing shareholders to realise part of their investment;
- Creating share participation schemes with identifiable benefits; and
- Enhancing the profile and status of the company.
The disadvantages of an IPO include:
- Greater scrutiny and accountability;
- Increased ongoing costs as a public company;
- Limited marketability of shares (particularly for smaller companies);
- Costs of the IPO (including the hidden cost of management time when not devoted wholly to running the business); and
- Increased vulnerability to unwelcome takeover (if there is a large percentage of the company in public hands).
What investors look for:
- An impressive management team with a broad base of skills. This will usually include a finance director or there should be the clear intention to appoint one at the appropriate time;
- A favourable market sector;
- Reasonable prospects for significant growth and usually a demonstrable track record; and
- A willingness to meet the demands put on public companies including the appointment of non-executive directors.