Who is involved
| Role | What they do |
|---|---|
| Issuer management | Owns the decision, the story and the numbers; signs the prospectus and is liable for it |
| Global coordinators | Lead banks; run the process, advise on structure and valuation, lead the bookbuilding |
| Bookrunners and co-managers | Additional banks that distribute shares and provide research coverage |
| Issuer counsel | Corporate restructuring, prospectus drafting, legal due diligence, regulator interaction |
| Underwriters' counsel | Protects the banks: due diligence, underwriting agreement, legal opinions, disclosure letters |
| Auditors | Audit and review of financial statements, comfort letters, reports on pro forma or forecasts |
| Independent IPO adviser | Advises the company on bank selection, fees, structure and valuation, independent of the syndicate |
| Investor relations adviser | Equity story, presentations, IR set-up, website |
| Financial PR | Media strategy, announcements, crisis communication |
| Listing agent / sponsor | Required in some markets to handle the listing application or act as sponsor |
| Paying agent, registrar, printer, data room provider | Settlement, share register, document production and due diligence logistics |
Choosing the banks
A bank selection process, often called a beauty contest, usually runs in three steps:
- Long list and request for proposal. Ask a handful of banks to present on the market, equity story, valuation approach, structure, timetable, team and fees.
- Presentations. Banks present to management and the board.
- Selection and engagement letters. Mandate global coordinators first, then complete the syndicate.
Criteria that matter:
- Sector research reputation and the analyst who would cover the company after listing.
- Distribution strength with the investors the company wants: long-only funds, specific regions, retail.
- Track record of comparable IPOs and how those stocks performed after listing.
- The senior team that will actually work on the deal, and their availability.
- Quality of advice on structure, risks and timing, not only the headline valuation.
- Fee proposal and incentive structure.
Be careful with banks that pitch the highest valuation. The pitch valuation is not binding and can raise expectations that later collapse in the bookbuilding.
Fees and engagement terms
Underwriting fees are usually a percentage of offer proceeds, split between management, underwriting and selling components, sometimes with a discretionary incentive fee. The split between syndicate banks is agreed among them with input from the company. Fees, cost reimbursement and termination clauses should be negotiated before mandating. Use the IPO cost budget to compare proposals on a like-for-like basis.
Selecting counsel and auditors
- Issuer counsel should have recent experience with IPOs on the target venue and with the regulator that will review the prospectus.
- Auditors may already be in place. Check that they have capital markets experience, capacity for comfort letters and, where needed, the ability to audit restated or converted periods. Changing auditors close to an IPO raises questions; if a change is needed, do it early.
The internal team
- Sponsor: CEO or CFO accountable to the board.
- Project lead: a dedicated person, often from finance or strategy, who runs the timetable and the adviser group.
- Workstream leads: finance and reporting, legal and corporate, tax, HR, IR and communications, IT and data room.
- Board sub-group or IPO committee: takes decisions between board meetings.
Protect the business: the people who run operations should not disappear into the project. Many companies hire interim support for finance and project management during the IPO.
Working rhythm
- A weekly all-parties call with a shared action list.
- Drafting sessions in fixed slots.
- A single, version-controlled document list and data room.
- A clear process for who may share what with whom, given confidentiality and research separation rules.