Equity Capital Markets
Raising equity and debt capital in global capital markets advice
Our capital markets professionals advise UK and international companies raising equity and debt capital in global capital markets, providing a range of services to deal with each client’s specific situation and needs.
In our latest update, ‘Opportunity in uncertainty', the Deloitte ECM team provides commentary on recent equity market activity and macro-economic considerations as the UK invokes Article 50 and the world deals with increased global political and economic uncertainty.
We focus on how best to approach, recruit and incentivise a Board at IPO and include a guest piece from recruitment experts Odgers Berndtson. We also provide a case study of the Xafinity IPO, which was the first Premium listed IPO in 2017 and was deliberately executed with a very low public profile.
Finally, we include the Deloitte IPO Barometer which has been well received in press IPO coverage over the last few years and looks at the performance of IPOs against the broader market – demonstrating that recent IPOs have outperformed the FTSE 350 on average.
Initial Public Offerings
Considering and ultimately deciding to make the leap to a public company requires significant effort from many parts of a business. Our dedicated Equity Capital Markets team (ECM) can support you at every step of the journey both before and beyond the IPO – choosing the appropriate market, preparing your business, executing the public offering and ultimately, establishing yourself as a public company.
Are you ready for the IPO journey?
To complete a successful IPO, it is vital that you are ready to list at the right moment. Many IPOs are delayed, or fail completely, due to a lack of rigorous, up front planning.
Deficiencies in the planning stage can impact the IPO process in a number of ways:
- Late identification of issues where rectification can delay the timetable
- Lack of skill-set in the organisation to meet the onerous requirements of an IPO process
- Insufficient resourcing to deal with time-consuming IPO requirements, in addition to running the business as normal
A failed IPO can damage the company’s reputation, impact management and employee morale, and result in significant costs having been incurred for no ultimate benefit.
The Deloitte approach
We have used our combined experience from working on over 150 IPOs in the last decade to create our IPO diagnostic tool – the diagnostic underpins a thorough assessment process covering all areas of your organisation, giving you confidence in the completeness of our findings.
Over a relatively short period of time and with minimal impact on management, we can gather the information we need to complete our diagnostic. Our assessment concludes with a focused management presentation, a written report detailing prioritised findings on areas requiring attention pre-IPO, and a tailored timetable for your specific situation.
Working alongside you, we will develop a step-by-step practical response to the issues raised, to leave you ready for the challenges ahead.
The IPO process – Readiness
Undertaking an IPO is complex and challenging. At Deloitte, we have found that one of the key components in supporting companies through the IPO process is the completion of the Readiness Review, which helps you identify and address the main IPO considerations in a timely fashion.
Businesses that are considering an IPO should review their readiness across a wide range of core areas (such as corporate and operational structure, governance, internal management reporting, the controls environment, historical financial track record and reporting, forecasting, financing, executive remuneration and incentive schemes and internal resources) as part of their IPO planning. Ensuring that a company is ready in these areas will allow management to maximise their time on the commercial aspects of the IPO such as interacting with potential investors.
The Deloitte IPO Readiness team can quickly assess your readiness for an IPO and provide detailed practical recommendations built into a tailored IPO timetable. Our approach is underpinned by our IPO diagnostic tool which draws on our extensive experience of previous IPO transactions enabling us to assess rigorously the readiness of each new company that we work with across the whole IPO process.
With our specialised team and our significant Main Market, AIM and other capital markets experience, we have confidence in delivering the most valuable and cost effective solutions to enable a smooth and efficient IPO process to you.
The IPO process – FPP
The Directors of a company seeking to list are responsible for establishing procedures that provide a reasonable basis for making proper judgements as to the financial position and prospects (“FPP”) of the applicant and its group. This regulatory responsibility helps ensure that, in advance of a listing, Directors and management can demonstrate that they have the ability to fulfil the financial reporting obligations that arise from being a listed company.
Good FPP procedures are a fundamental requirement for an IPO and key to good ongoing investor relations. The Deloitte IPO team can help you assess the adequacy of your processes and procedures and provide assistance at documenting these to the standard required for a listed company. Our team provides tailored insights into your business’s FPP procedures, using our extensive equity capital markets experience and knowledge. We also use our experience to benchmark your procedures against other companies that have listed on the Main and AIM markets, resulting in robust and appropriate FPP documentation for your business.
The IPO process – Reporting Accountant services
The execution of an IPO normally takes between 4 – 9 months, depending on which market is selected and which regulatory requirements apply. The process, especially in the UK, relies heavily on the accounting work streams falling into place to meet key milestone dates.
The Deloitte approach
Our ECM experts have unparalleled knowledge and practical experience of the listing rules for main Market and AIM listings in the UK, as well as a close network of ECM professionals in Deloitte offices internationally to ensure that we offer you the best team for listings in overseas markets.
Your team will have ECM professionals to deliver everything required during the IPO, including IFRS conversions, specialised accounting, tax structuring, corporate governance, treasury, IT, and financial reporting and controls.
The IPO process – Advisory and assistance
The role of independent financial adviser on IPOs is becoming well established and is increasingly being recognised by the market. We act for clients as IFA and lead them through all stages of the IPO, for example helping them select other advisers, project managing the timetable and offering a second opinion on any issues that arise during the process.
Importantly, we have no institutional shareholder allegiances – we sit on the same side as the board and help to ensure that the perceived conflicts that exist within investment banks are managed appropriately. We draw upon our highly experienced, dedicated team as well as Deloitte’s wider network of sector and regional specialists to provide tailored and truly independent advice to clients. We are also able to act as Sponsor for the purposes of the Listing Rules of the UK Listing Authority.
Post IPO advisory
A successful IPO is a momentous occasion in a company’s life cycle, representing the end of one journey and the start of another with fresh challenges for employees, management and the board. The strain of the IPO process on company resources can often result in minimal planning and preparation for life after the event.
We leverage our extensive knowledge of companies we work with during the IPO process to help them navigate in the unfamiliar waters of public company life. We provide unparalleled “after-care” advice and practical hands-on support post IPO to tackle typical challenges such as:
- Compliance with listing rules and regulations;
- First time financial reporting and peer benchmarking;
- Managing expectation of boards and committees;
- Effective governance and internal audit;
- Risk management and reporting;
- Enhancing financial position and prospects procedures;
- Finance transformation and efficiency of finance team;
- Complex accounting following IPO e.g. group reorganisation and share based benefits;
- Ongoing remuneration policy, benchmarking, and establishing long term incentive frameworks;
- Bid defence; and
- Managing interactions with investors.
Whilst the focus of IPO activity is on the equity side of the balance sheet it is important not to neglect reviewing how the business is funded from a debt perspective. Institutional shareholders of listed companies have different expectations of appropriate levels of leverage for their investee companies to carry. These are often lower than private shareholders and as a result the terms obtainable by a listed company will typically be more favourable than would have been available prior to listing. Listing without arranging appropriate debt facilities, therefore, risks significantly impairing shareholder value. In addition the vast majority of private company debt facilities will contain provisions requiring the repayment of any outstanding debt on the event of a listing.
Out debt advisory team advises over a dozen FTSE 250 and Small Cap borrowers on their re-financings in a typical year, and regularly uses this expertise to advise clients seeking to obtain a listing on how to arrange appropriate post-IPO debt facilities on the most borrower-friendly terms available. We are always delighted to provide an update on debt market conditions to any borrower contemplating a listing and our advice combines high-level commercial guidance and practical hands on assistance.
Remuneration structures at IPO
With the intense workload that accompanies an IPO it is easy to overlook remuneration structures. Our market-leading Compensation and Benefits practice advises on all issues from what happens to existing equity incentives to the appropriate levels of salary and incentives in the listed environment. We help our clients navigate the multiple governance and reporting requirements and draft prospectus disclosures on remuneration policy. Our share schemes lawyers and executive remuneration consultants help companies ensure that remuneration appropriately rewards and incentivises both senior management and the wider employee population in the run up to IPO and beyond and that the arrangements are effectively designed, implemented and communicated.
Secondary fundraising and significant transactions
We regularly advise listed companies wishing to undertake acquisitions or disposals, including Class Transactions (for Premium, Main Market listed companies), Related Party Transactions (for both AIM and the Main Market) and any other ad hoc shareholder circulars.
Our reporting accountant services assist and advisory services including Sponsor services also apply to secondary fundraising requiring the publication of a prospectus, including rights issues, placings, and open offers.
We are one of very few professional services firms accredited to act as Sponsor for the purposes of the Listing Rules of the UK Listing Authority. We are able to advise companies seeking admission of their shares to trading on the premium segment of the Main Market, as well as providing Sponsor advice post admission.
Our dedicated team has members drawn from the accounting, investment banking, regulatory and broking community, all of whom have an excellent knowledge of the Listing Rules and the regulated market environment, PLC boards and corporate governance structures including market norms as well as key market participants including broking expertise.
We are an accredited Nomad, able to advise companies seeking admission of their shares to trading on AIM as well as providing ongoing advice post admission.
Our dedicated team has members drawn from the accounting, investment banking and broking community, all of whom have an excellent knowledge of AIM admission processes and the AIM regulatory environment, PLC boards and corporate governance structures including market norms as well as key market participants including broking expertise.
Transactions subject to Takeover Code
The Takeover Code may apply to companies whose shares are quoted on the Main Market or AIM or indeed some private companies. We have the technical expertise and significant transaction experience to act as lead adviser on either the buy-side or sell-side (Rule 3 Adviser) of these complex transactions. In recent years we have advised UK and international corporates, private equity firms and management teams on numerous public offer transactions.
Our transaction history illustrates the depth of our experience and knowledge in this complex arena and includes hostile bid defence, mandatory offers and recommended bids in competitive, friendly and auction scenarios across all industries.
We can assist management teams that are in receipt of an offer or are considering soliciting offers for their company. Alternatively we can assist potential offerors (including management teams) in developing and executing a strategy for acquiring companies subject to the Takeover Code.
Examples of our work
IPO of Morses Club Plc
Deloitte acted as Financial Adviser, Reporting Accountant, Remuneration Adviser and also provided IPO Assist services to Morses Club on its £140m IPO.