IPO readiness
Going public can bring numerous benefits to your company, however, the journey can lead to various pitfalls through the process, therefore it is best to be ready for the IPO (initial public offering) and start to prepare well ahead.
In our experience, we have found that businesses that have undertaken a full pre-IPO readiness exercise to identify the key issues are those companies that gain most from an IPO project. By planning early, actions can be taken to minimise potential unpleasant surprises and provide flexibility to make the most of unexpected advantageous situations.
IPO diagnostic is a structured way of analysing and reporting on a company's readiness for going public. It is essentially hiring an advisor to due diligence yourself.
Key areas of a diagnostic include:
- Financial reporting procedures and internal controls;
- Corporate structure and tax considerations;
- Financial track record and complex transactions;
- Corporate governance;
- Timeline and availability of resources.
The output is a roadmap of what needs to be addressed during the IPO preparation process. The project does not take long; we are able to respond to your needs in about 3 to 6 weeks.
Standard scope of IPO diagnostic
- Clear strategy and stable financial position
- Transparent structure
- Corporate governance
- Timely and accurate reporting
- Transparency and disclosure
- Reputational predictability and corporate citizenship
Clear strategy and stable financial position
- Vision, mission and strategy;
- Business plan, budgets, forecasts and performance management reviews;
- Assessment of the management team to run a public company;
- Review of the financial track record;
- Assessment of the credit history and rating;
- Review of the dividend policy.
Transparent structure
- Review of the legal structure;
- Assessment of the functionality and flexibility of the tax structure and compliance;
- Ability to function on a stand-alone and arms-length basis;
- Definition and respect of the group management reporting lines and policies;
- Assessment of the motivations and remuneration including share incentives.
Corporate governance
- Assessment of the board and other committees composition;
- Review of the level of internal independence and objectivity;
- Assessment of the role of the chairman of the board and chief executive officer;
- Definition of the board composition of the board and its sub-committees (audit, nomination and remuneration);
- Assessment of the internal audit functions, of the risk management framework and related processes.
Timely and accurate reporting
- Robust internal processes and controls;
- Ability to produce timely IFRS reporting within required time-frame;
- Ability to monitor and report KPIs on a timely basis;
- Corporate Treasury policy;
- IT environment and security;
Transparency and disclosure
- Review of the financial framework and reporting;
- Assessment of accountability and responsibilities;
- Communication, compliance and monitoring;
- Assessment of the role of the audit;
- Review of public disclosure and investor relations.
Reputational predictability and corporate citizenship
- Review of the code of conduct and of the fraud risk management policies;
- Focus on business ethic, health and safety and social and environmental obligations.
Benefits
- Early identification of pitfalls;
- Time for remediation;
- Workload planning and avoidance of bottlenecks;
- Minimum disruption to the company's business;
- Acceleration of the time to market and ability to take advantage of "market windows";
- Improved management and staff expertise;
- The IPO diagnostic assessment assists in the marketing efforts toward the banks:
- It allows the company to show preparation and to demonstrate that action has been taken to be positioned as a public company;
- Additionally, it assists and streamlines the banks' due diligence process.
It pays off
- IPO is a competitive market; investors are more selective and wishing for highest quality;
- Compared to the total listing costs and value received, an IPO diagnostic is worth the effort;
- Based on our experience, completing an IPO diagnostic is becoming market best practice;
- The sooner, you look and act as a public company, the better.
Contact us
Giuseppe Corsini
Assurance Partner, Capital Markets Leader and Sustainable Finance, PwC Luxembourg
Tel: +352 49 48 48 4957
