Executing a successful IPO

The execution phase of an IPO provides an important opportunity to maximize investor confidence and increase your company's potential valuation. Engaging the right advisors can signal to potential investors that the IPO will be handled successfully.

The journey from initially documenting your company's 'equity story' in a preliminary prospectus to the final closing meeting can be a tumultuous and overwhelming process. Early planning, project management and access to a team of experienced advisors that have navigated the process is key to a smooth IPO and securing the best valuation of your business.

This legal document will include information about your company, details of the securities to be issued and the intended use of the proceeds of the offering. Underwriters also use this document to assess the extent of public interest in the securities. Preparing the preliminary prospectus is a detailed and time-consuming process that requires consideration of various complex regulatory requirements. It is critical to engage experienced legal and financial advisors to guide you through this process.

Your underwriters and their legal counsel will conduct an in-depth review of your company, its operations, financial information, and material agreements. They will issue a certificate that is filed with the prospectus.

The due diligence is a demanding process that probes deeply into your company and its affairs. Management can expect to devote considerable time and resources to this process.

Your company must complete the appropriate stock exchange listing application and provide any additional information as required by the exchange.

Securities commissions will review your preliminary prospectus and provide a letter describing any deficiencies (comment letter). Once the securities regulators receive satisfactory responses, you will be in a position to file your final prospectus.

Few first-time prospectuses complete the regulatory review process without any comments. Engaging experienced external advisors can help you identify sensitive areas and anticipate potential issues.

Showcasing your company to potential investors begins after the preliminary prospectus is filed. Typically, the prospectus is supported by two other sources of information - a green sheet that is prepared by the underwriters and a road show presentation.

Many companies hire an investor relations firm to help develop the message, prepare the presentation, coach the presenters and also handle the logistics of the road show.

Final pricing typically occurs 1 or 2 days before the final prospectus is filed. Although you may have developed the desired price range for your shares, market conditions and the level of interest in your company may change over time.

Pricing is subjective. Stay tuned to market conditions. There is a fine line between overpricing your offering and leaving too much on the table.

After comments from regulators have been cleared, final terms of the offering have been received and you are satisfied that there are no material undisclosed developments since the preliminary prospectus was filed, the final prospectus can be filed. The underwriters may begin to sell the securities.

Other legal documents for your offering (such as amalgamation of entities, share redemptions, employee share option agreements) also need to be carefully planned and executed.

This signals the successful completion of your IPO; you receive the proceeds of the offering and begin life as a public company.

The transition to being a public company is immediate. Be prepared to face the challenges and increased accountabilities that come with being in the public domain.

Illustrative timeline for an IPO filing process

To learn more about how we can help you on your IPO journey, contact one of our KPMG in Canada IPO Advisory professionals.