IPO Preparation & Execution: A Practical Guide for Success

An Initial Public Offering (IPO) is career defining for those involved. Most CFOs and finance teams will only complete one in a lifetime. 

Reflections from CFOs tell us that private companies should “Act like the company is public today, have that mindset”. What does “having a plc mindset” actually mean for a private company CFO? It boils down to three areas:  

• Early preparation
• Robust execution
• A clear vision for life as a public company

Here are some practical insights into these areas that we have learnt from helping CFOs and finance teams through 18 IPO processes in the last 4 years. 

1. Prepare Early—Set the Foundation for Success 

Early preparation is essential for any successful IPO process. This can take between 6 and 12 months. The level of disruption to the company should not be underestimated as the process can take up significant resources putting business as usual activities under pressure.

The window for successful listings is dependent on economic conditions and so any business considering an IPO needs to be ready to take advantage of an open listings market at short notice, so plan ahead and focus on the following:

• Gaps that exist in the company’s information, processes and the organisational structure necessary to be a compliant and effective plc, 
• Understanding fully what the IPO-critical workstreams will entail, when they need to be completed and the resources required to complete them, 
• Early engagement with advisors, especially the Sponsor or Nomad, “assembling the team”. 

The Key Workstreams for the finance function to plan are: 

1. Develop a medium-term working capital forecast for use during and after the transaction
2. Detailed reporting of historic financial and operational performance including KPIs
3. Establish robust management and board reporting in line with plc best practice
4. Implement effective finance policies, processes, and controls
5. Design an optimal finance team structure and start to put this in place

Consult with your Sponsor, as they will have strong experience and an extremely good understanding of how to effectively engage with the market. They will advise you on what will be needed and when you will need it.

2. Robust Execution 

“Nothing is as unappealing as an underperforming company coming to market”  

The finance team must focus on the day to day trading and processes that deliver the results. 

Most finance teams therefore need some form of augmentation to execute a successful IPO. This could be through enhancing your finance team with permanent hires who will provide corporate memory going forward or additional experienced support from teams who have seen this before, or other interim support, or a combination of the above (all have their pros and cons).

Whichever route you decide on, get the team in place early in the process so that you are well set for life as a plc.

There is far more discretion under the UK Listing Rules (UKLR, FCA Policy Statement PS24/6) reforms of what Boards need pre and post listing. However most Boards will require some assurance that there is sufficient working capital, appropriate forecasting, and robust processes in the business.

We have set out below some success factors for each of the IPO accounting workstreams: 

Historic Data Pack 

Ensure there is one version of the truth pulling operational and financial information into one place. Don’t give advisers information from different sources that result in endless bridging and reconciliation exercises and cost overruns.

Working Capital Model  

It’s not just for the Working Capital signoff. You will need this for ongoing rolling quarterly forecasting for the plc board. Make sure this forecast can be operationalised efficiently and used by your FP&A function.

It is much easier to have the Working Capital Forecast (detailed) in place prior to Market Testing Information (summary). 

FPPP Assessment and Remediation 

Focusing your efforts on the remediation actions to improve your finance function and reporting will be far more beneficial than simply spending time on drafting the FPPP memo.

IFRS Reporting and Conversion 

Ultimately your auditor or reporting accountant will sign off your IFRS conversion. Engage with them early. 

You’ll need to report under IFRS in the new world. It’s worth investing in an efficient process to do this now. 

3. Life After IPO—Sustaining Success 

One thing is certain, there will be more work for your finance team after the listing than there is before. The completion of an IPO is often described as “not the end of the process but the beginning of life as a transformed business”.

You will have identified many of the additional workstreams for the finance team through the FPPP process. As noted above, it makes sense to recruit ahead of this need so you can develop corporate memory and reduce reliance on consultants.

Inevitably however there will be gaps within your finance function post listing. Addressing these as soon as possible should be a high priority. You will also need to consider how the finance function can support the business and stay ahead of its future growth.

Another area identified in the FPPP will undoubtedly be the requirement for accurate and timely lead indicator information to be presented for the Board to act on. There will be real focus on your FP&A function and how the process for reporting leading KPIs from operations to the Board can be embedded.

Timely, sustainable, and compelling reporting will also be essential for Investor Relations. Think ahead to your first half year report, i.e. how might the likely performance compare to the roadshow presentation? Once key metrics have been explained to analysts, or where they are readily available from peer companies, there will undoubtedly be an ongoing requirement to report these. It is essential therefore to ensure that there is an efficient process to extract, critique and understand these metrics well in advance of any external reporting.

Summary 

Completing a successful IPO will be helped by having the right advisers to guide you through the process, but internally as a finance team we often see three activities which we consider key to not only a successful listing, but also continued success as a listed business.

• Build your team early – hiring and developing your team with the relevant skills is critical for efficient IPO preparation and post-IPO operations
• Understand timelines and interdependencies – look ahead to anticipate critical activities and manage stakeholders effectively
• Prepare for life after IPO: ongoing reporting and investor messaging 

How Swan Partners can help 

With over a decade of experience working with listed businesses and preparing companies for their IPO Swan Partners have significant experience to draw upon in assisting companies during and after the listing process, including:

Pre IPO 

• Historic Data Packs for the Long Form Report – Providing one version of the truth for all workstreams which is based on robust data for external review
• Working Capital Model – Creation of integrated models with live scenario modelling capability for credible growth storytelling.  
• FPPP Assessment and Remediation – Swift assessment of FPPP compliance, with emphasis on an actionable remediation plan and help executing the plan.
• IFRS Reporting and Conversion – diagnostic and conversion for IPO with embedded ongoing reporting.  

Post IPO 

• Governance & Controls – creating practical tools for ongoing compliance and risk management 
• Investor Relations – reporting the right KPIs and outputs for effective market messaging with an efficient repeatable process.
• Future-proofed Finance Functions – providing a holistic review to ensure that the finance function is capable of delivering the strategic plan for the future growth of the business.

Swan Partners are a senior team of commercial financial operators who work at pace alongside CFOs and their teams to prepare operationally useful outputs that can be used in the IPO process.

We bring hands-on expertise, creative problem-solving, and a proven track record to guide companies through every phase of the journey, including:

• Day-to-day partner involvement from senior, commercial industry operators 
• Quick, pragmatic, and creative solutions tailored to each client 
• Deep understanding of operational and advisory challenges and how to resolve them 
• Deliverables designed for their ongoing usefulness and knowledge transfer 

Contact

We’d be delighted to discuss any of the above with you in more detail.

Please contact us for a free consultation and discover how we can support your IPO ambitions.