If you’re a business owner looking to raise funds and take your company to the next level, there’s a good chance you may be considering taking things public. While it’s easy to get carried away with the heady excitement of listing your business, the reality is grounded in hard work, long hours, and complex paperwork.
My business, Zoom2u Technologies, listed on the ASX in September 2021. While the listing was very well received with the price almost tripling within the first week, here’s an inside glimpse into the reality of the IPO process, along with some key pieces of advice for business owners and leaders to keep in mind along the way.
Get your health in check
Zoom2u started its IPO journey during a particularly active growth spurt at the start of 2021, as online ordering exploded the courier and delivery sector amid the pandemic. This meant a lot of work and countless late nights, and we quickly found ourselves with (what felt like) two very demanding children – the business and the IPO.
It became clear that I needed to strengthen both my mind and body to get through this stressful period. I hired a personal trainer two to three times per week, ate well and made sure to prioritise sleep. If your brain and body are tired, the quality of work that you put out will suffer. There is no room for less-than-perfect work when planning for an IPO.
Prepare your people
IPOs cannot be prepared alone. Reach out to those who have gone through the process before and who are open to sharing their mistakes and discussing it with you openly, including your selected broker.
Speaking of brokers, don’t go with the first person you find – take your time to meet a few, and select a broker who really understands your business and growth plans and who is in it for the long haul. Don’t always go for the ones with flashy websites and streams of clients. Chances are, if they are as popular as they look, they will have less time for your personal venture. Don’t be afraid to request referrals, and talk to people who have used your broker before.
For your board, look for people with ASX experience, especially those who’ve worked with companies of your size. Your legal team must have IPO experience, as this will make the process much smoother.
Don’t forget to keep the rest of your employees in the loop with your IPO plans. Communicate clearly that your time will be split, and that they will need to maintain the smooth running of the businesses while the process rolls out.
The IPO process
Preparing for an IPO takes time. Allow up to a year for the whole process; the better prepared you are, the shorter the time it will take to get listed.
Part of this process will also include due diligence committee meetings (DDC). This is a series of meetings run by your lawyers. At each meeting you need to prepare various details about your business for everyone that’s on the committee – lawyers, accountants, brokers, the board members – and ensure that you disclose everything you need to disclose to potential shareholders. Get this wrong and you could be sued for not disclosing risks. In tandem, I recommend establishing a data room such as Ansarada to securely store important company documents as evidence of due diligence.
Lastly, the prospectus. This is an acutely detailed document broken up into sections which clearly defines your business, your vision, your offering, financial details and any risk disclosure. Our prospectus ended up being 200 pages, so this is no small task. Think of this as a brochure for investors: an exciting document packed with all of the great reasons that investors should invest in your company and budding IPO.
The prospectus then goes through verification, which means everything you say about your business needs to have evidence linked to it, whether it’s registration papers, legal documents or accounts. It’s a lengthy process, so allow enough time to get it all prepared. The prospectus then goes to ASIC for review.
The non-deal roadshow
Once your prospectus is finalised and approved, another pre-listing step is called the non-deal roadshow. This comprises about 20-30 pitch meetings with potential investors, different funds and high net worth individuals.
During these meetings, you will offer them a preview of your prospectus over about three to five days, and answer whatever questions they have. It is absolutely vital that you prepare heavily for this, and know your numbers inside out.
From these meetings you will be able to build a register of investors and field bids for when you finally list. We were very successful in our non-deal roadshow, which actually saw us oversubscribed when we finally listed, meaning we had more people wanting to invest in us than there were shares available. This allowed us to select the right investors – those who are also in it for the long haul and not looking to sell their shares in the first days of listing.
Finally: Life After Listing
As the icing on the cake, it is worth engaging in a public relations strategy pre-listing, to help build some positive momentum about the raise. An external agency can support in reporting on any positive action your listing takes.
For example, Zoom2u’s listing tripled in price in the first 48 hours, and an agency can help to secure media coverage of these successes that will far out-live the volatile nature of your stock price – and help your business go from strength to strength for years to come.