If your business is considering an initial public offering (IPO) on the Australian Stock Exchange, there are some issues you need to consider.
Preparing for an IPO is a significant undertaking. Here, we look at the timescales involved, the documents you will need to prepare and the process you need to follow to ensure a successful listing.
Understanding the Timeline for an IPO
The Australian Stock Exchange (ASX) has several requirements for businesses wanting to list. Once you've ascertained that you meet these criteria, the planning can begin.
Organizations considering an IPO shouldn't underestimate the time needed to effectively prepare. Even the most straightforward listing will need around three months before it completes; for a more complex IPO, you will be looking at upwards of five months.
The good news, though, is that there are steps you can take to ease your path to going public. Your planning and prep work can help to reduce the completion time and, if you can get your assets and data in order in-house before you appoint external advisers, potentially reduce your costs.
How to Prepare for an Australian IPO in Three Months
Now's the time to identify your management team ' the legal, accounting and financial experts who will guide the IPO to completion. Brief your leadership team on the plans and requirements for the listing.
Now is also the time for scoping out the due diligence implications of the IPO. The ASX requires that a prospectus, containing strictly prescribed information, is lodged with the Australian Securities and Investment Commission (ASIC) prior to any listing. For this, you'll need accurate and up-to-date information on your financial situation, governance processes, legal matters and a range of other entity data. Start thinking about how to gather the data for your prospectus as early as possible.
You'll also want to consider your corporate structure. Complex and unwieldy structures can be anathema to potential investors; if this sounds familiar, you may want to use the impending IPO as an incentive for some restructuring.
Quite aside from the fact that a simpler entity structure will make you more appealing to investors, post-IPO, it will also make it easier to gather the data you'll need to operate with the transparency expected of a public company.
Early on, you will want to establish specific workstreams and responsibilities for some of the core aspects of IPO preparation.
These should cover areas including:
- Corporate structuring
- Due diligence
- Capital structure
- Offer structure
- Regulatory matters
- The IPO prospectus
- Marketing your IPO
Much of your time will be spent building on your month 1 planning; gathering due diligence data; preparing financial reports and forecasts; confirming accountability for areas like corporate governance and ensuring you have an effective compliance audit trail.
You will also want to make progress on drafting your prospectus and deciding how your offer will be structured; the offer structure will determine whether any corporate restructuring is needed before you list.
By month 3, your prospectus should be being finalized and your team ' internal plus external parties, like brokers ' being firmed up. Internal and external communications, including pre-IPO marketing, will begin.
Understanding your Obligations around Documentation
The ASX requires numerous key documents to be submitted prior to any listing on the Exchange.
You need to provide your:
- ASX listing application
- Charter documents
- Employee incentive plans
- Corporate governance policies
- Share trading policy
- Any executed restriction agreements
- A schedule confirming your spread of shareholders, minimum free float and top 20 shareholders
- Documents evidencing that your directors are of 'good fame and character'
The importance of accuracy and completeness when it comes to the data you provide can't be understated. The need to obtain data from all your organization's legal entities can be one of the key sticking points and major challenges in advance of an IPO.
If your organization has grown through M&A activity, it's likely to have many legal entities; something that can have negative implications when listing your business. This can be an issue on several levels.
First, because best practice entity management is inherently more difficult when you are overseeing numerous entities across a range of jurisdictions.
Second, because having a complex web of legal entities can make it harder not just to manage your business, but to evidence good management. Gathering the compliance, financial or other corporate data the ASX requires is a bigger challenge when it's collected and shared across different systems, or worse, manually.
The Benefits of Entity Management Software for IPO Preparation
This is where entity management software can come into its own. As organizations grow more complex and their global footprint grows, managing legal entities grows more challenging.
Trying to keep track of the data you need to support a public offering, or to run a public company, can be almost impossible. Entity management software makes efficient and effective entity management a reality, enabling you to centralize and manage data management across all your subsidiaries.
If you're considering an IPO, ensuring you are in control of your entities' financial, risk, compliance and governance performance is essential. And being able to access the data makes providing the necessary documentation a far simpler task.
Diligent Entities, Diligent's market-leading entity management software, provides businesses with a single source of truth; reliable data that can underpin IPO documentation, as well as making it easier long-term to manage your newly public company.
If you're planning a listing, investing in entity management software can pay significant dividends in making your entity management more robust, streamlined, reliable and efficient. You can find out more or request a free demo.