The expected IPO of Shein, the online fashion giant, has created a storm of controversy since it announced plans to go public, while also throwing London back into the IPO spotlight.

The recent listing of Raspberry Pi has also been viewed as a welcome victory for the London Stock Exchange, which has suffered a series of high-profile snubs recently, from the likes of tech firm Arm, which opted to list across the Atlantic last year.

As optimism returns to the economy following a sluggish period, it’s likely that many organisations waiting in the wings to IPO will start to reconsider their options. Preparation is a crucial part of the journey to IPO and can take some time to get right. 

Focusing on critical tasks like building the right team and ensuring finance reporting and compliance are watertight will be a priority. In tandem, nurturing the trust of existing investors to maintain stability and appeal to future investors will be crucial. 

Let’s take a look at just a few reasons why pre IPO companies should be prepared – and how.

Preparing for an IPO

An IPO is a defining milestone in an organisation’s history. Like any significant event, listing on the stock market needs precise planning, because although becoming a publicly traded company is a huge opportunity, it’s also a significant challenge.

Naturally, any company announcing its plans to IPO will be exposed to the most rigorous financial scrutiny in the run-up to its listing. However, there are real benefits to early preparation, and those focused on fiscal strategy and compliance early in the process will continue to benefit long after it has become public. 

The first job is assembling a team capable of rising to the challenge ahead. This is not simply a case of numbers. It’s about gathering top minds from diverse domains, ranging from legal experts and financial advisors to experienced consultants who have worked on IPOs at other companies.

This team will steer their organisation through an IPO and onwards to an unpredictable future. Making the right hires and appointing the right internal candidates is critical.

Companies should also allocate budget and resources to compliance, focusing on deploying the right tech. They are strongly advised to consider hiring internally and commissioning an external consulting firm to bring expert knowledge and experience to the table. Leading with empathy will help staff acclimatize to new rules and controls whilst preparing for an IPO.

‘Innovation sucks if you’re too early’ – BBC producer-turned-founder

Investing in better relationships 

Investor relations are also fundamentally important to an IPO. As organisations prepare to list, the spotlight will be on them —  and the optics can get tough. Organizations need to stay close to their stakeholders and nurture their relationships before, during, and after the IPO. Trust and transparency are key and will ensure greater stability.

Leaders must focus on building confidence, sharing the company’s aspirations and dreams. But they also need to know about hard reality. Comprehensive audits sustain confidence — and they will be coming soon enough — so accurate financial reporting and clear, organized documentation are the orders of the day. Fast, effective accounting shows a commitment to transparency while demonstrating organisational efficiency and reliability to improve investor confidence further.

Getting the right investor line-up

It’s also crucial to ensure there is diversity of thought and experience amongst the investors on the cap table, which shows a company’s ownership structure. This ensures that no one investor holds the lion’s share of influence and that there is greater equality when it comes to investor interests. If a company’s ownership is concentrated, there is a greater risk that other investors will simply walk away. 

When investors sell stock after an IPO, it is not only bad news for the company. It also spooks the market, causing a wider economic impact and potentially slowing down or discouraging other IPO activity. 

Why has London become the back-up destination for IPOs?

Life after IPO 

Everything changes after a company is listed on the stock market. Organisations such as Shein, with rapid growth and profitability pre-IPO, need to be able to adapt quickly to the new expectations of public investors. Staff and leaders face a new level of scrutiny and strict rules and regulations that are dramatically different from those they previously worked under. Agility and adaptability are critical. 

When the company is public, a single mistake or brief moment of indecision can impact the stock price. Decision-making processes that once happened behind closed doors now take place in the harsh spotlight of public scrutiny. Everyone from C-suite executives to entry-level staff must align with a new reality in which public perception can make or break a company’s success.  

 As signs of green shoots emerge in the IPO landscape, it is essential to remember that success in this realm has a ripple effect. When a business  makes a splash with its public entry, it spreads optimism throughout the market and encourages other ambitious players to begin their own IPO journey. Get it right, and you’ll benefit – not just your company, but the entire economy.

After ebullient debut, what lessons can Raspberry Pi take from ‘worst IPO in history’?