A company embarking on an IPO should appoint its team of advisers at an early stage. Securing good quality advisers who are experienced in successfully executing similar IPOs is one of the key aspects of
preparing for an IPO.
A company seeking a London listing will need to appoint an investment bank or broker to act as sponsor for an ESCC listing or as “nominated adviser” or “nomad” in the case of AIM. Often, the sponsor or nomad is also the lead or sole underwriting bank – larger offerings usually involve a syndicate of underwriting banks.
The reputation of the relevant research analyst(s) in any given bank, particularly in the company’s industry or market sector, is frequently influential in the appointment of the banks that act on the IPO. The research that the bank’s analyst produces will need to remain independent from the company and there are restrictions on the type of information and guidance that can be given to the analyst. Companies should therefore consider the quality of the analysts at the relevant bank or broker who are likely to provide research coverage.
Provided one or more banks or a broker (usually the sponsor) is engaged at an early enough stage to allow the structure of the offering to be developed and due diligence commenced, additional syndicate members may be engaged (each publishing their own research report) later on in the process. Additional research may also be provided by analysts who are unconnected with any of the banks.
In addition to appointing the sponsor, it is not unusual for larger companies to appoint an “independent” financial adviser in connection with the IPO. The financial adviser, who is not a sponsor, is considered free from any perceived conflicts of interest in certain matters, such as appointing the banks(s) or pricing the shares that will be offered to investors.
In addition to the sponsor, additional banks and, potentially, a financial adviser, reporting accountants and lawyers (both for the company and the banks) will be needed. Typically, lawyers and accountants will need to start their work approximately 6 months before the date of listing.
A firm of public relations consultants may also play a role in the transaction by managing the coverage and publicity in relation to the company around the IPO.