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The London market for initial public offerings (IPOs) has traditionally been very active. There’s a strong track record of successful companies listing on the London Stock Exchange or Alternative Investment Market (AIM). 

And while numbers of IPO listings on the London stock markets fell by nearly half in 2023, according to research by EY, the company predicts that the second half of 2024 may see pent-up demand leading to more IPOs in the second half of the year.

If your business is considering an initial public offering (IPO), what do you need to know? What are the benefits of an IPO and how does the process work? 

Our step-by-step guide provides an IPO checklist of things to consider for any business exploring the IPO route.

Why consider an IPO?

Companies list publicly for a variety of reasons: 

• Primarily, an IPO is a way of raising capital; to get the money needed to expand, invest in research, people or assets
• It can also be a way for the company’s founders to exit the business and capitalise on the success of a company they have set up
• A welcome side-effect can be increased visibility and awareness of the company, due to the publicity generated by the IPO process

Although the advantages of an IPO can be numerous, there are also a number of potential barriers and other considerations that you should be aware of before going ahead:

• IPO costs can be significant – you should be aware of the cost implications before you proceed
• An IPO means handing over some control of your business to others – something not all entrepreneurs are comfortable with
• Going public brings with it significant regulatory and disclosure requirements – annual reporting, for instance – which companies need to comply with 

None of these considerations should prove an insurmountable barrier – and with the right research, support and advice, many businesses find the IPO process runs smoothly and delivers the benefits they were seeking. Understanding the process and its requirements, though, is key if you want to reap the benefits of an IPO while avoiding the pitfalls.

So, what are the steps in the UK IPO process? And how can you prepare for a successful listing? Take a look at our IPO checklist below for help.

Preparing for an IPO in the UK

You need to adhere to UK listing rules if you are planning an IPO on a London stock market. These cover issues ranging from due diligence to documentation. What are the essential steps in the IPO process?

1. Decide the IPO is right for you

Maybe a precursor to the IPO process itself, but a vital one. Are you ready to go public? Is it definitely the right route for your business? How prepared are you? Answering this question requires you to evaluate your finances, potential for growth and future ambitions.

2. Appoint your advisers

If you decide to go ahead, your next step should be to appoint advisers. Companies wishing to IPO usually appoint an investment bank to act as underwriters and support them on their journey. The bank advises on the best initial share price to set, guides the company through the IPO process and acts as an intermediary between the issuer (company) and investors (potential shareholders).

You may also want to hire other advisers – typically companies appoint accountants, law firms and public relations firms  if they need advice on financial or regulatory aspects of the IPO. It’s important to choose advisers with strong IPO experience, who fully understand the process and are able to identify any potential stumbling blocks as early as possible.

3. Due diligence and regulatory requirements

What is due diligence in IPOs? If you plan to go public, your underwriter (investment bank) is required to carry out a full investigation of your company’s finances and operations. 

This IPO due diligence will include looking at any risks facing the business, checking your documentation compiles with regulatory requirements, and ensuring your reporting is up to date. You can read more here about some of the documentation you’ll be expected to provide in the due diligence process.

4. Create your IPO prospectus

The IPO prospectus is a legal document required by the London Stock Exchange before companies can be listed. The prospectus is a cornerstone of your IPO process – and not just for regulatory reasons. It is your ‘shop window’, the way you show investors what your firm has to offer.

It’s therefore important to ensure it contains not just the required information but an engaging introduction to your business and the potential it has for investors. Working with a supplier experienced in producing IPO documentation will give you a head start here, as they will have an instinctive understanding of what needs to be included, as well as an ability to meet the tight timescales often required in IPOs.

Your prospectus will include details of the company’s financials, business model, the rationale for going public, any risks the business faces, your management structure and the IPO offer. 

5. Submit your documents

If you’re preparing to list on the London Stock Exchange (LSE) or Alternative Investment Market (AIM), your prospectus must be approved by the Financial Conduct Authority (FCA) before submitting. IPO admission documents must be filed with the relevant regulatory authority – which is also the FCA for UK IPOs. The FCA may ask for additional information; if so, you need to comply with their requests as quickly and fully as possible.

6. Prepare the offering

This includes setting the IPO share price. Your investment bank will help with this, including with ‘book building’ (the process by which your advisor assesses interest in your offering) to determine the optimum share price. 

You will also want to consider how you allocate shares – how many will be made available to investors (retail and institutional); will you set any aside to be available for employees, etc.

7. Market your offering

This is an exciting stage in the IPO process; whipping up interest in your business; getting potential investors excited about the prospect of your listing.

Marketing your IPO includes creating a compelling investor deck – the document that sets out what taking a stake in your company can offer investors. Producing engaging materials is crucial, of course, and again, working with a design and production house with experience of IPO documentation will give you an advantage.

But look and feel isn’t the only consideration here; you are sharing your company’s most commercially confidential information with possible investors, so security is also vital. Consider how you will share your investor deck and other marketing documents with potential shareholders. 

Increasingly, companies going through an IPO are choosing secure data rooms to host their investor communications, ensuring they’re only seen by those they’ve approved to view them. 

The best data rooms don’t just give reassurance on security, they also provide invaluable metrics which enable companies to identify the documents potential investors are most interested in, and tailor follow-up conversations accordingly.

This step in the process also includes running investor roadshows – opportunities for potential shareholders to meet with you and your advisers, ask questions and obtain the information they need to make an informed decision on investment. This is a vital stage in the fundraising process and one that’s new to most companies going through an IPO. Partnering with experts who have experience of running and supporting roadshows offers the support and assurance you need to ensure your roadshows are compliant, secure, compelling and successful.

8. Apply for your listing and begin trading 

• An exciting day. You will need to re-register your business as a public company before you can offer shares publicly.
• Once your company is listed, the shares become available for trading as soon as your chosen exchange starts trading. Congratulations! – you are a publicly listed company.

9. Trading as a listed company

Your first day of trading is a milestone, of course, but it’s not the end of your journey – far from it. Listing is just the start of your story as a public company, and with it comes a raft of compliance obligations and new regulatory requirements; we touched on these above. 

Whether it’s financial reporting obligations, or requirements around ESG reporting or pay reporting that now apply to your company, it’s essential that you keep abreast of your new compliance obligations. The stock exchange on which you’re listed will also have its own specific rules.

Expert support at every stage of the IPO journey

Deciding to IPO and become a publicly listed company is a big decision for any business. You will need to weigh up the opportunities and ramifications of listing before deciding to go ahead. If you decide an IPO is the right route for your business, Perivan can support you every step of the way.

Perivan is the only provider able to support companies fully across all aspects of the IPO process. From fundraising through to roadshows, via our highly-secure IPO data room and expert document production processes. Get in touch to find out how we can help you with your IPO.