How to Launch Your IPO Without Any Problems

June 13, 2021

By

Kevin Valley

A professional business valuation lends gravitas to the IPO application/submission...

In a previous article, I described a few of the systems and controls a company must take before it can consider itself ready to list on a public stock exchange. In this article, we are going to map out the steps needed to have a successful IPO.

Your process for listing on the stock exchange should resemble the following steps:

  1. Select Your Team of Professional Advisors
  2. Outsource the Business Valuation Exercise
  3. Prepare the Prospectus
  4. Complete the Registration and Listing Applications
  5. The Road Show – Marketing the IPO


Select Your Advisory Team

It is advised that you engage the following professional advisors as early as possible:

  • Business Financing Advisor – though optional, the right business financing advisor can save you a significant amount of time and allow you to focus on running your company. The degree of assistance this advisor provides in the IPO process will depend on your needs. Some of the services may include:

–      Assessing your business strategy and financial feasibility,

–      Advising on the development and assessment of your business plan and financing prospectus,

–      Preparation of a business valuation to determine the price at which you offer your shares to the public, and

–      Connecting you with the right investment bankers and stockbrokers to coordinate the IPO.


  • Professional Business Valuator to lend credibility to the offer price you determine for your shares. This is discussed further below.
  • Investment Bankers / Broker-Dealers / Underwriters – whose role is to

–      Review your company’s management team, business model, business plan and financial position,

–      Structure the offering to match your company’s needs with those of investors,

–      Work with you and your business financing advisor to finalize the issue price of your company’s shares

–      Arrange the issue of the shares and potentially agree to purchase any unsold shares thereby ensuring full subscription.

–      Ensure the successful sale of the shares to the public investor market.


  • An attorney with knowledge of the relevant local legal framework and laws to prepare the legal documents.
  • Accountants & Auditors who understand legislative framework and tax issues and will be responsible for the accurate preparation of your company’s financial statements.
  • A stockbroker who will be responsible for making the application to list on the stock exchange.

The IPO process starts by engaging a lead underwriter (typically an investment bank) and negotiating a deal, whereby you both agree on the amount of money that is to be raised in the IPO, the type of shares that are to be issued, and the level of risk that the underwriter would assume in the IPO.

For instance, the underwriter could acquire all the newly issued shares and resell in the public market, acquire none of the securities and simply sell the shares on your behalf, or syndicate the total amount to be raised with other underwriters to reduce the responsibility for selling the total issue.


Valuation and Pricing

A professional business valuation lends gravitas to the IPO application/submission. It is recommended that you look for a qualified valuation professional who also understands your business.

As discussed in the previous article, it is crucial that as a business owner, you have systems in place to have your financial information readily available for the valuator, demonstrating years of historic performance and metrics which can be extrapolated going forward. This is critical as valuators will need to understand the proof and research behind your company’s future growth expectations.

The report you receive from the valuator will be his/her professional opinion, expressed in a range of values. It is up to you and your business financing advisor to determine how to use this information and at what price you will offer your shares to the public.

For your IPO to be successful, I highly recommend that you price your offering at the low-to-mid end of the valuation range.

Note that the largest portion of your investor audience (in dollar size) will most likely be institutions with large investment portfolios and cash holdings. These institutions are typically staffed with specialized finance professionals whose job is to maximize return by investing at prices below your company’s fair market value. If they deem your company’s shares to be overpriced, this would inevitably hurt your chances of having a successful offering.


The Prospectus

Prepare the offering memorandum/prospectus with the assistance of your business financing advisor. This prospectus is a detailed document that will include the following:

  • Background information on the company: This gives the description and history of the company and the industry, its prospects, operations, and succession plan.
  • Audited financial statements: While this requirement may be prohibitive for younger companies, having a recognized accounting firm prepare and audit your financials lends additional credibility to investors.
  • Business Plan: The business plan provides important information for potential investors. It details growth projections, as well as the developmental and strategic goals of the company.
  • Use of funds: This shows the main uses of the net proceeds from the sale of shares. This may include the particulars of any major assets to be acquired, prospects to be developed, or any other expansion plans you have for the company.
  • Key Team Members and Major Shareholders: The prospectus must give the names, main occupations, and addresses of major shareholders, senior officers, directors, and senior management, together with their equity holdings in the company.

The next step would be to prepare and file the prospectus with the relevant securities regulator.


Registration and Listing

Below is a general outline of the process for listing on the Trinidad and Tobago Stock Exchange. Note that the registration and listing process might differ by territory, so be sure to research the process in the jurisdiction where you plan to list. ,

  1. Register with your local securities and exchange commission as a Reporting Issuer.
  2. Submit a listing application through your appointed stockbroker.
  3. Execute of listing agreement once the listing application has been approved.
  4. Deposit a block of shares with your local Central Depository to facilitate the trading of the shares on the stock exchange.
  5. Provide evidence of the appointment of the stockbroker.

A detailed description of the process and costs associated with listing on the Trinidad and Tobago Stock Exchange (TTSE) can be found here.


The Road Show: Marketing the IPO

At this stage, you would work with your underwriters (investment bankers) to pitch the shares to institutional investors in the lead-up to the actual flotation. This is what is referred to as the “road show.”

All the work you would have done previously was to prepare you for this stage. As I mentioned earlier, institutional investors may be motivated to buy into the securities if they believe that the price would increase after the IPO date.

The business of raising capital is an extremely competitive one and your company must be able to get on the investors’ “radar screens” - people need to know about the IPO and the company in order to invest.

Reputable investment banking and brokerage firms have well-established networks to assist small businesses in their initial public offering (IPO). Maintain a close relationship with your brokers and ensure that they are speaking to their clients and stakeholders and get feedback. Their job is to do the selling/heavy lifting to bring in the investors after you give the pitch of your company, vision, and growth plans.

To keep analysts and investors interested in the company, your company’s senior management must be available to participate in industry sector conferences, talk to analysts, and maintain contact with institutional investors.

It is also recommended that you leverage public relations (PR) practitioners to assist with publicity by working with media sources such as radio, TV, and other popular channels to get a wide range of stakeholders involved.

This was an outline of the steps you must take to successfully take your company public. In our next article, we will discuss what you must do after your company has gone public.

For more information, please send an email to kevin.valley@becomeinvestible.com

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