IPO Questions

An IPO is the process of offering private company’s shares to the public for the first time. Companies may consider an IPO to raise capital, increase their public profile, facilitate mergers or acquisitions, or provide an exit strategy for early investors. 

Several factors contribute to IPO readiness, including financial stability, strong growth potential, a compelling business model, a solid management team, and a clear vision for future expansion. Please get in touch if you would like us to assess your company's readiness. 

IPO execution typically takes several months to a year, depending on various factors such as the company's size, complexity, regulatory requirements, and readiness. It involves a significant number of tasks such as those described on our website. We often start preparing our clients as early as 2-3 years before the target IPO date.

The IPO process generally involves refining a company's strategy, formulating its investment thesis, preparing a business model and choosing a valuation strategy, auditing financial statements, selecting underwriters, conducting due diligence, drafting a prospectus, filing with the regulatory authorities, conducting roadshow presentations to potential investors, pricing, and finally, listing on the chosen stock exchange(s).

The choice of stock exchange depends on factors such as the company's geographic presence, industry, investor base, and desired listing requirements. The main international exchanges for IPOs include the New York Stock Exchange (NYSE), NASDAQ, the London Stock Exchange (LSE), and the Hong Kong Stock Exchange (HKEX). In the European Union, the key stock exchanges are Deutsche Börse (FWB, the Frankfurt Stock Exchange) and Euronext (ENX).

By listing on a major stock exchange, companies can access a broader investor base, enhance their visibility, and enable liquidity in share trading after the IPO. However, the significance of liquidity becomes more important for larger companies with valuations reaching tens of billions of dollars (or equivalent in the local currency equivalent). The choice of the listing venue is a crucial consideration in preparing for an IPO and we offer our clients a thorough review of their listing options depending on each individual case. 

IPOs involve increased regulatory compliance, public scrutiny, and ongoing reporting requirements. Companies may also experience increased pressure to meet quarterly earnings expectations and manage investor relations effectively. Additionally, market conditions and investor sentiment can impact an IPO’s success.

Determining the offering price involves assessing the company's financials, industry comparables, market conditions, and investor demand. At an early stage in the preparation processs, we work with our clients to refine their strategy and build a solid financial model to achieve an optimal valuation of their business. We also make an early introduction to the leading global investors to get to know the management and investment case and hear their feedback. We aim to secure the participation of the anchor investors in the deal so that we increase interest from the wider investor base and create momentum in the bookbuilding process. After the kick-off of the deal, we work closely with underwriters to refine marketing strategy and perform the IPO. 

Yes, companies have alternatives such as private placements, venture capital funding, strategic partnerships, or debt financing. Each option has its own considerations, and we can help you evaluate which approach aligns best with your company's goals and circumstances.

While AdAstra plays a crucial role in the IPO preparation process and provides valuable services, it cannot fully replace investment banks. It is important to note that we work on the issuer side as a part of the company's team. Among other things, investments banks provide valuable financial and strategic advice, offer guidance on valuation, organize marketing and roadshow investor meetings, undertake underwriting and distribution of shares, advise on the offering’s pricing, and execute IPO settlement. 

Contractors for an IPO include a range of professionals such as investment banks or underwriters, legal counsels representing the issuer and the underwriters, auditors, as well as PR and media consultants.