IPO Preparation

How to get your venture ready for an IPO exit.

To prepare an Initial Public Offering (IPO), legal and economic requirements must be fulfilled. The legal preparation of an IPO includes administrative, regulatory and corporate requirements. The economic preparation includes requirements regarding the business model, financials and management team. Direct listings and SPACs represent alternatives to the lengthy process of the traditional IPO.

Legal preparation

Tasks: Preparation of legal stock-exchange eligibility by fulfilling administrative, regulatory and corporate requirements.

Administrative requirements

  • Transfer of all assets required for operations
  • Presentation of three audited financial statements according to HGB, IFRS or US-GAAP

Regulatory requirements

  • Introduction of risk-management system
  • Implementation of International Financial Reporting Standards (IFRS)
  • Compliance with requirements regarding share value, share quantity and free float
  • Capable IT-based reporting

Corporate requirements

  • Selection of suitable corporate legal form
  • Establishment of supervisory board
  • Compliant structuring of the equity position

Economic preparation

Tasks: Preparation of economic factors like business model, financials and management team to interest potential investors.

Business model requirements

  • Transparent and proven business model with clear strategy
  • Scalability of the business model
  • Effective risk management and corporate governance

Financial
requirements

  • Stable earnings or clear path to profitability
  • Realistic valuation assumptions
  • Timely, internal and external accounting

Management team requirements

  • Strong management team
  • Clear commitment of management and owners to the company

Next Steps after preparation

Selecting underwriters: Selection of financial institutions as underwriters to support the further IPO process

Due Diligence: Preparation and execution of different due diligences as well as regulatory filings for approval

Road Show: Planning and execution of road show to meet and convince potential investors

Pricing: Execution of the company valuation and subsequent pricing of the shares using different placement procedures

IPO: Execution of final IPO and the transaction process

Alternatives to the IPO

Direct Listing

The company directly sells the shares itself without the assistance of underwriters.

SPAC

The company is acquired by listed special purpose acquisition company (SPAC), which is financed by investors. Both merge to one publicly listed company.

Founders, invested venture capitalists, vested employees and other investors sell their own shares.

Sponsors invest in SPAC which raises additional money by going public. Once public, the SPAC targets and acquires a target company which must be approved by the sponsors.

Pricing issues of traditional IPOs due to underpricing of the IPO by the underwriting investment banks are bypassed.

Utilizing a SPAC to go public is faster than a traditional IPO and associated with less effort.

At Trustventure, we advise young companies on financial issues and offer CFO-As-A-Service. Our expertise in questions of corporate finance, planning and controlling creates transparency and security for you and your investors. Reach out to us via our contact form or write to us directly at office@trustventure.de.

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