Capital Raising

How to become Investor Ready

The key requirement for any company seeking to attract “outside” investors, whether on an IPO or through private equity investment, is to be “investor ready”.  This means the company will have appropriate controls, policies and procedures to enable the directors to closely monitor the company’s trading performance against market expectations and to be able to respond appropriately to any external “shocks” that might affect the actual or perceived trading performance. Being “investor ready” also requires a board with the appropriate blend of skills and experience to be able to challenge management effectively and so improve the decision making process. In this way, outside investors can have confidence that, although they do not have the same intimate connection with the company as the management, the right courses of action are being properly considered.

Very often becoming “investor ready” is used as a stepping stone on the company’s development journey towards an IPO which can then be used to facilitate an exit for earlier stage investors.

Why consider an IPO?

An IPO is a very effective option for raising capital for a business and in turn provides a liquidity event for early investors.  Through this process, a privately owned enterprise is converted into a company whose shares are traded publically to raise capital.  There can be significant benefits for the company, its shareholders and employees in an IPO which include achieving a market value for the shares, facilitating acquisitions through the issue of equity, widening share ownership to include quality, institutional investors, increasing employee incentivisation with share options, tax incentives and raising the company’s market profile.

If you decide to commit to an IPO to raise capital, we will work closely with you and project manage all components of the process.  Pre-IPO work is done to ensure the company is “investor ready “ for public company investors who do not have the same degree of connection as the owners of a private company, with appropriate checks and balances to ensure good corporate governance.

Which Market?

If you do decide that you wish your company to “go public”, we will always consider all options when advising on the best route to market.

AIM is an attractive option to consider and we can also arrange full listings.

Why do companies seek admission to AIM?

  • To raise capital for growth, both at the time of admission to trading on AIM and thereafter to enhance their ability to make acquisitions using quoted shares as a form of consideration;
  • To provide a partial or full exit from the company for some of its shareholders;
  • To create a market for the company’s shares, facilitating trading in them and so making investment more attractive to prospective investors;
  • To increase the benefit of employee share schemes by attributing a market value to the company’s shares and providing a market for the sale of shares upon exercise of underlying options or warrants;
  • To increase the company’s profile through greater press and analyst coverage; and
  • To enhance the company’s status with customers and suppliers, who may be reassured through the regulatory and corporate governance processes required for a successful AIM quotation.

 

There are other factors that a company should take into account when deciding whether or not to seek admission to AIM:

  • The company must be deemed ‘appropriate for admission’. This means the board must have an appropriate blend of skills and experience and achieve a standard of corporate governance not necessary for an unquoted company.
  • Outside shareholders’ interests have to be taken into account. Such shareholders generally invest in a company on the basis of the potential future profits and cashflows expected, and uncertainty might lead investors to have less confidence in the company’s ability to deliver on subsequent profit and cashflow expectations. The company must be “investor ready” (link to investor ready copy) with robust reporting and forecasting procedures and controls.
  • The AIM admission process requires a significant time commitment from the directors with no guarantee of success until relatively late in the process.
  • Admission to AIM involves disclosure ‘without delay’ of numerous matters, many of which do not need to be disclosed by unquoted companies. Additionally, companies traded on AIM are obligated to keep their investors informed through potentially time-consuming investor relations activities.
  • Finally, any publicly quoted company should be prepared for its share price to be affected by factors beyond its control, including national and international economic or political developments and other factors affecting investor perception of market value.

Nominated Adviser (NOMAD) and Adviser Services

All AIM listed companies are required to use the services of a NOMAD. WHIreland is ranked 3rd largest NOMAD  by number of AIM clients.  We provide strategic as well as regulatory advice to our clients to ensure compliance  with their continuing obligations under the AIM rules.

WHIreland also acts as financial adviser to companies on NEX Exchange (previously named ISDX) and the standard list of the London Stock Exchange.

To find out more call us on +44 (0)20 7220 1666