How to Choose the Right Adviser for your IPO

Achieving an IPO is a major milestone for any company. However, to achieve the best price and earn investors' confidence, you'll need to navigate a complex regulatory landscape and time the IPO effectively. 

Why is it so important to work with an adviser when preparing for an IPO?

The challenges of preparing for an IPO go far beyond meticulous planning, timing the launch, and navigating complex regulations. The transition from a private to a public company also requires significant operational and cultural changes - which take months, sometimes years, to prepare for. Without an expert eye, it’s easy to make mistakes that can jeopardise this process and reduce the likelihood of a successful IPO.

How can an adviser help you launch your IPO sooner?

Probably the best value proposition an adviser can offer for a company preparing for an IPO is that they can help you get to market sooner. The timing of your IPO is critical; the longer you wait, the greater the likelihood that a competitor will get to market before you do. This could weaken your market position and dilute the demand for your company’s shares.

An adviser can also help you:

• Understand your biggest opportunities and threats (for example, investors’ demand in your products, new competitors that might launch soon)
• Help you avoid many of the common pitfalls that other companies face when preparing for and launching an IPO
• Position your company as an attractive option for investors
• Prepare all the technicalities (documentation, etc)

How to choose the right adviser for your IPO:

One key decision in this journey is choosing the right adviser. The right partnership can pave the way for a successful IPO, while the wrong choice can lead to costly mistakes and a failed launch. In this article, we’ll explore how to choose an adviser that can help you get to market as soon as possible, achieve the best valuation, and maintain stable growth after your IPO:

Here are 10 things to look out for when considering an adviser for your IPO:

1. Transparency

Is the adviser transparent about any challenges you might face during and after the IPO launch? Will they draw up contingency plans for a worst-case scenario (i.e. the market crashes when your IPO is scheduled to launch)? Are their fees transparent and are the terms of the agreement clearly set out in writing?

2. Expertise in your sector

Advisors with sector-specific experience bring a deeper understanding of market dynamics, regulatory nuances, and investor expectations. They can provide tailored advice that aligns with your industry's unique characteristics and challenges.

3. A strong track record of successful IPOs

Experience matters, especially in the high-stakes world of IPOs. Look for advisors who have a proven track record of successful IPOs. This not only demonstrates their ability to navigate the IPO process but also indicates their ability to adapt to various market conditions and regulatory environments.

4. Expertise in the relevant regulatory frameworks

Because IPO regulations and other financial regulations vary across different jurisdictions, it’s essential to choose an adviser that has expertise in your jurisdiction’s regulatory framework.

5. A strong network and reputation

Have a look at your advisor's network? Does it have good relationships with other companies in its sector?. This includes connections with investment bankers, underwriters, legal experts, and regulatory bodies. An advisor with a diverse, global network can facilitate introductions, negotiations, and collaborations that can improve your prospects of a successful IPO.

6. Strategic insights and advice

The importance of obtaining quality advice and the strategic insight an advisor provides cannot be overstated. For example, a good adviser doesn’t just guide you through the mechanics of the IPO process; they will also offer strategic insights to help you position your company to investors and maximise inflows after your IPO launch. 

7. Cultural fit

This may not be as important as sector-specific experience; however, as the IPO preparation process often takes several months, it’s worth considering whether your adviser is a good fit for your working culture.

8. Is your adviser flexible in an unpredictable market?

The word ‘flexible’ sounds like a cliche; virtually every adviser will make this claim. However, ask the adviser to provide examples of situations where:

• They had to adapt to unexpected market changes.
• The adviser has helped the company adapt to a significant change in the regulatory framework.
• They mitigated any losses incurred as a result of an IPO delay that was beyond your control

9. Look out for an adviser that offers a full suite of services (not just IPO support)

If your IPO is a success, consider using the same adviser to help you with other important business objectives, such as mergers of acquisitions. These transactions also require meticulous planning, due diligence, and the expertise of an adviser.

10. Great testimonials

Many advisers will include testimonials on their website, although non-disclosure agreements may prevent them from publishing testimonials from some clients. There’s no harm in asking for testimonials or references before you make any commitments.

Conclusion

Choosing the right adviser for your IPO can help you achieve a successful IPO and post-merger integration. The ideal candidate will offer the right regulatory and industry expertise, a strong track record of successful IPOs, transparent communication, and the ability to take advantage of changing market conditions.