10 years +
Your underwriter may take a proportion of shares; your accountant, law firm and PR firm may cost up to 8% of the amount you hope to raise
The IPO process takes up to 12 weeks but planning and negotiations typically take up to 18 months
Raising investment capital or restructuring finances
Established businesses with an annual turnover of over £5m
An Initial public offering (IPO) marks the first time a company sells shares to the public. It’s also known as ‘listing’ or ‘floating’ on the public markets.
An IPO is the first time a business raises finance publicly (before an IPO, you can only raise funds privately). Going public allows you to raise large sums of money from new investors (e.g. for expansion) and gain a large number of new shareholders while retaining control of your company). Existing (private) equity investors might drive an IPO because they’re looking to sell their stakes in your business.
Floats or IPOs are generally undertaken by smaller companies looking to expand or by large privately-owned companies who want to become publicly traded.
There are a number of reasons why a company may consider offering their shares to the public. It can:
But there are some disadvantages:
An IPO is often called long-term, patient capital because once you have gone public; you can raise money time and time again, over years and even decades.
Public companies have to disclose financial information regularly. This means keeping shareholders and the market (including your competitors) updated with half-yearly and annual results.