Taking your company public? Here’s how to prepare for an IPO

^{In this blog series, we will break down the key aspects of taking your company public, starting with IPO readiness. Read on to explore the three areas to focus on to accelerate your IPO readiness.}

Preparing for an IPO readiness assessment

An IPO readiness assessment ensures that your company is prepared when the time comes to go public. Planning for and executing on an IPO can be a demanding and complex process involving multiple stakeholders. Thus, having a structured and robust IPO readiness process is essential for securing a successful IPO without taking unnecessary focus from existing task, strategic initiatives, and the operation of the business. Beyond the IPO itself, the readiness process adds long-term value – even if plans change.

Ideally, companies should start preparing for the IPO assessment 18-24 months in advance. A thorough assessment helps identify maturity gaps and key focus areas, ensuring readiness for the IPO. The process assesses financial and governance areas, ensuring compliance with listing requirements and investor expectations such as: financial track record, internal controls, risk management, reporting processes, budgeting, ESG compliance, and corporate governance. It is important to state that companies should start operating as a listed entity before the actual IPO.

Additionally, defining the preferred marketplace early is key, as listing requirements vary across countries and exchanges. While the home market often offers the best positioning, some industries benefit from global exchanges like Nasdaq US due to the investor landscape and demand for the shares.

Key elements of an IPO readiness process

Based on our experience with IPO processes in both Denmark and globally, we have identified 3 key areas to address in an IPO readiness process:

• The business plan and the forecasting process
• Visibility & clear transparency into financial figures
• Building a structured organisation

The business plan and the forecasting process

Gaining and maintaining the trust of investors and analysts is fundamental to a successful IPO. Investors rely on companies to provide clear and reliable financial information while consistently meeting expectations and avoiding surprises that could impact valuation and market perception. Therefore, companies need to develop a strong financial planning and forecasting capabilities, including:

• A detailed business plan that provides a roadmap for future growth, financial performance, and strategic direction.
• A structured and thorough forecasting process that gives companies the opportunity to track performance, allocate resources effectively, identify any deviations from the plan and to take corrective actions to stay on track.

It is important to start practicing as a listed company in due time before the IPO, ensuring that the forecasting process is well defined and robust including having the key assumptions identified. It is also important to ensure that deviations to the forecasts are assessed enabling explanations on revised guidance following the IPO.

Transparency and clear visibility into financial figures

Transparency into financial figures is essential both before and after an IPO. A lack of financial transparency can cause delays in the process and distract attention from the company’s core operations. Aligning all messaging such as financial reports, investor calls, and communication both internal and external is key to building credibility and consistency. Transparent and regular investor communications ensure compliance while strengthening trust and confidence with stakeholders.

Having an efficient and high-quality financial reporting process helps provide accurate and timely financial updates, thereby maintaining investor and regulator trust and confidence.

Building a structured organisation

Having a well-structured organisation with clear roles and responsibilities is central to ensure a robust governance framework and compliance with regulatory requirements. This is a must for gaining investor confidence and meeting the demands of being a listed company – and creating a well-structured organisation involves:

• An optimal corporate structure.
• Setting the right team with the necessary capabilities.
• A board and audit committee aligned with corporate governance recommendations.

Based on our experience, onboarding a dedicated investor relation team well in advance is often an important priority. This team ensures consistent communication, confidentiality, and it practices and prepares the company for investor calls and questions following financial reporting.

Focusing on and prioritising these three key areas will not only prepare you and your company for your IPO readiness assessment, but it will also lay the foundation for lasting success.

Want to prepare your company further for an IPO readiness assessment? Stay tuned for our upcoming blogs, where we explore best practises and insights for a smooth transition.