IPO Readiness: 3 Ways Scaling Companies Can Ensure They’re Compliant
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What’s the biggest major milestone your company will go through? For the lucky few, it’s an initial public offering (IPO)
For the businesses that make it this far, it’s a moment when years of hard work and ambitious growth culminate in going public. It represents business maturity and market validation. For the founders, CEOs or leadership teams that take their company that far, this journey isn’t just about a financial transaction; it’s the moment a private, closely-held vision steps onto the public stage.?
But of course preparing for an IPO is not easy. The stakes are high, and the demands—especially in areas like compliance, governance, and board structure—are exacting. Regulatory requirements, investor expectations, and the pressure of scrutiny at every level require an entirely new set of capabilities and processes.?
So what does the road to a successful IPO look like? And what are some of the obstacles that businesses face along the way? We were fortunate enough to get the insights of not one but two experts in the IPO strategy and regulatory space - Michael Jacobs and Dylan Doran Kennett.?
‘Naughty teenager syndrome’?
“We always see companies coming through a much earlier stage at Series A round where we always call it, um, naughty teenager syndrome, where, you know, the company has not been maybe as compliant with GDPR data protection laws”
In those crucial early years where you’re growing your global business, rapid growth is paramount.?
But many early-stage companies operate in a phase where rapid growth often overshadows compliance. Dylan refers to this as the “naughty teenager syndrome,” a stage where resource limitations lead companies to overlook certain regulatory requirements, such as data protection laws. But as these startups scale, this can become problematic, especially when considering an IPO or acquisition down the line.?
Compliance gaps may result in major hurdles during the IPO process. These foundational issues, if unaddressed, could risk the credibility of the business during investor evaluations and regulatory reviews.?
So what can businesses do to prevent this ‘move fast, break things’ mentality from hampering IPO success further down the line??
Start early
Build a compliance framework as the company scales, ensuring it aligns with regulatory requirements to avoid "sticky" IPO challenges down the line. This framework can be built gradually, but it’s important not to see fast growth and regulatory compliance as mutually exclusive - instead, remember that one is integral to the success of the other.?
Draw on investors’ expertise
Seek support from proactive venture capital investors who are well-versed in guiding startups as they build compliance into their processes. For instance, Dylan mentioned the value of "crossover rounds," where companies bring on public market investors before an IPO.?
What’s more, crossover investors, who have experience in both UK and US listings, can help bridge the compliance gaps between countries.?
Build the right board
Scaling companies may lack a board with the experience necessary to guide IPO preparation, leading to gaps in compliance, finance, and strategic planning.
In our conversation, Michael & Dylan suggested a deeply practical approach to building the right board, advocating for the addition of Non-Executive Directors (NEDs) with IPO-specific experience well before the public listing process begins.
Here too, cross-border expertise is invaluable. For example, Michael and Dylan reminded us of the importance of adding board members with cross-border expertise who understand the US's more rigid regulatory environment as well as the UK’s evolving but comparatively flexible approach.
Compliance. Say the word and one often just thinks about legal standards.?
But in the context of an IPO, it’s about far more than that - it's about signalling reliability and resilience to future shareholders. By prioritising compliance from the outset, companies not only streamline their IPO process but also position themselves as trustworthy, stable investments that can grow sustainably in the public sphere.
What’s new at Omnipresent
Listen: how to navigate your scaling business to IPO
Understanding capital markets and listing reforms is essential for businesses aiming for growth.?
In our latest episode of the Global Workforce Podcast, Michael Jacobs, Partner at Herbert Smith Freehills, and Dylan Doran Kennett, Venture and Growth Capital specialist, and partner at the same company, share their expertise on IPOs, M&A transactions and the impact of UK listing reforms.
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