Initial Public Offerings

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IPO planning and decision-making

For most private businesses, an IPO will be a completely new experience. As any leader of a recently listed public business will tell you, the success of an IPO lies in the planning and preparation.

Preparing for your IPO

The IPO transformation process has three critical components:

Organizational change: systems, controls and policies adequate for a private company may not be best suited to help grow the company and monitor its performance. Your legal, financial and risk management infrastructure may need to change. How a company communicates any necessary changes internally will also affect staff retention.

World class financial organization: companies shouldn’t underestimate the financial and time commitments associated with going public and meeting regulatory requirements. Stakeholders will also want the business to be financially transparent.

Delivering on the promise: although exciting, life in the public markets is different. Public company stakeholders expect to be provided with company information and returns on their investment. If they don’t get it, then market confidence can slip — along with the share price.

During and after the IPO process, the CEO’s and CFO’s roles assume a new balance between time spent managing sharemarket relations versus managing the business. As the co-pilot of the pre-IPO process, the CFO’s role becomes critical to a successful outcome, and the CFO's finance team must have both public reporting and independent audit experience.

A company’s internal infrastructure must be capable of managing day-to-day operations within the context of the public domain.

IPO services at EY

A member of the IPO team will be able to discuss in detail the services that will most benefit your company.

 

Reporting accountants

 
Services Auditor / public reporting Private reporting Other advisory
Short form / pro forma / forecast    
Long form  
Working capital  
Financial reporting procedures  
Tax structuring  
Project management support  
IFRS conversion / financial reporting advice
Process improvement (financial, business, IT)  
Corporate governance design  
NED programme  
Sustainability and environmental advisory  
Executive performance and compensation  
Partial   Full

IPO decisions to make

Balancing your considerations

Take time to examine the pros and cons of an IPO
While the headline message that many major exchanges broadcast is that an IPO allows you to raise capital and improve your international profile whilst retaining control of your company, we would advise you to evaluate carefully the broader benefits and considerations of undergoing this process, so that you understand their implications for your business:


Benefits of an IPO

  • Raises your firm’s international profile with both investors and peers.
  • Provides strong opportunities for future financing.
  • Increases the valuation of your firm, and improves its financial position.
  • Increases the marketability of your firm.
  • Creates a path to future mergers and acquisitions.
  • Allows for the diversification of personal portfolios, hence reducing exposure to risk.
  • Allows for the realisation of capital gains.
  • Enhances corporate image.
  • Provides a method of incentivising employees.

Considerations of an IPO

  • Can limit freedom to act without justification.
  • Transparency can mean a loss of privacy.
  • Management’s success is shared with shareholders.
  • Regular reporting is required.
  • Corporate governance requirements include:
       - Business process improvements.
       - Non-Executive directors’ oversight.
  • Shareholder expectations can create a pressure on management to perform.
  • Means that you have a responsibility to act in best interest of all shareholders.

 

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International IPO specialists

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