Initial public offerings (IPOs)
When it comes to IPOs, Comco Consulting facilitates access to and communications with the entire range of market players, from investment service providers, to analysts, Euronext, and the AMF.
Make it easier for you to enter the financial market.
With our combined approach to communications, finance, strategy and regulations, we assist SMEs and mid-cap companies in accelerating their growth through IPOs.
Our service offering :
- Preparing the IPO: analysing the project feasibility, creating the investment story to convince investment service providers (lawyers, statutory auditors, etc.), and drafting the business and financial sections of the registration document.
- Helping listed companies update and coordinate their draft registration documents.
- Helping listed companies with their financial disclosure requirements.
Tell us about your projects.
How and why to optimise your financial disclosures ?
Investors, bankers and other lenders decide to invest in or finance a company when they are certain that it is capable of repaying its debts and generating profit. They need to know that, over time, the company will enable them to make a profit and so reward them for investing and believing in it.
This is the case for both listed and unlisted companies, because all businesses need to secure financing to guarantee growth.
Given the above, it is crucial that companies know how to communicate. They need to be both credible and appealing in order to show that their projects are viable and profitable, but they also need to know how to convey information. It is not enough to simply present the accounts or the business plan; what matters is how you present your market and business model, i.e., how you create, deliver and capture value. Simply put, the business model needs to be straightforward and succinct.
Not all companies do this, without realising that they are failing to maximise their financial disclosures and, as a result, losing out on numerous financing opportunities.
What is an IPO ?
An IPO (Initial Public Offering) is a financial transaction that involves selling a company’s securities on a stock market.
An IPO enables companies of all sizes to raise capital from new investors. The securities can be proposed to both institutional and individual (private) investors, as well as to employees of the company. In France, the AMF (French financial markets authority) authorises an IPO when at least 10% of the securities are intended for individual investors. Less than 1,000 companies out of a total of 2.5 million are listed on the French stock market.
Companies go public in order to finance projects, accelerate growth or enhance their reputation. An IPO is a key strategic decision which, although it can genuinely drive growth and provide unquestionable benefits, can also be a long and costly process. Before starting out on such a path, most companies need to substantially overhaul their corporate strategy and consolidate their structure and organisation.
An IPO’s success hinges on both internal (equity story, business model) and external (valuation, timing and communication) factors. It is easy to understand why, when markets are in turmoil, companies prefer to postpone their IPO to a more appropriate time.
Financial communication: is long-term thinking an asset in times of stock market turbulence ?
Over the 2007-2020 period, S&P 500 groups whose financial communication is focused on the long term have seen their share price increase by a factor of 5 on average, while those of companies with a more short-term approach have tended to stagnate.
Over the most recent period, the shock to share prices in the first quarter of 2020 was an average of -11% for the “long-term” group, compared to -30% for the “short-term” group.
Thinking in the long term is therefore an asset in terms of financial communication.
Comco Consulting can help you in your financial communication strategy. Do not hesitate to contact us to learn more about our support offer at contact@comco-consulting.com.
Crafting an equity story that will convince investors ?
An equity story is the vision companies present to investors with a view to raising capital or performing an IPO. It needs to be meticulously crafted, relevant and persuasive if it is to convince would-be investors, highlighting the growth opportunities and qualities that enable the company in question to create value. Some common themes include corporate strategy, medium- and long-term vision, and objectives, with the aim of reassuring investors and encouraging them to acquire a stake in the company.
If there is the slightest doubt or misunderstanding the investors may go elsewhere. The key is to be both clear and informative so that even people who are unfamiliar with your sector can understand all the ins and outs of your equity story.
A successful equity story involves:
- A reassuring track record
- An attractive investment hypothesis
- A promising growth plan
- A recognised management team capable of supporting the company’s expansion
- Long-standing shareholders that are confident about the future and retain a significant share of the capital
- Appropriate timing
Comco Consulting is a strategy consulting firm specialised in supporting SMEs and mid-tier companies. If you require assistance in raising capital or preparing an IPO, please contact us at contact@comco-consulting.com.
What are the key factors for a successful IPO ?
Companies that succeed in their IPOs generally have:
- A good track record
- An attractive investment proposal
- A promising growth project
- A well-known management team capable of supporting the company’s growth
- Long-standing shareholders that are confident for the future and hold a significant share of the company’s capital
- Appropriate timing
Equally importantly, the IPO must:
- Offer fair value
- Ensure targeted and effective communication
- Involve an offer structure that suits the company’s profile and requirements (capital increase/disposal)
- Be sufficiently large to ensure liquidity
- Have an appropriate selection of investors who understand the project and have a suitable investment policy
Why go public with a consulting firm in Paris ?
An IPO holds many advantages for businesses, including the possibility to:
- Increase financing capacities
- Diversify financing sources
- Finance an acquisition through a share exchange
- Increase visibility/prominence
- Involve employees in the company’s growth
On the shareholder side, an IPO allows more capital to be raised, more quickly, as a result of:
- Guaranteed liquidity (at least partial)
- Ongoing development on the part of the company
- The ability to keep control of the company, whilst at the same time raising capital
- The entry of new investors
- Facilitating the company’s disposal or transfer
Case studies
Assisting a sports and leisure equipment company with its IPO.
A sports and leisure equipment company in France’s Haute Saône region was looking to be listed on Euronext Paris with a view to financing its growth through acquisitions and consolidating its market. Comco Consulting was part of the team assisting with this operation.
Our role was to :
- Prepare the company’s equity story to give a clear overview of the Group and its business;
- Help draft specific sections of the prospectus (document de base) and consolidate the data provided by the company and other external stakeholders;
- Coordinate the work of the various teams (company, lawyers, statutory auditors, investment services providers).
Coordinating and updating the registration document (document de référence) for Roche Bobois - a leading, high-end designer furniture company in Paris.
Roche Bobois, which had been recently listed on Euronext Paris, required our assistance in preparing its Registration Document.
Our role was to:
- Update the prospectus published in connection with the IPO, with the information for the most recent financial year;
- Create a “3-in-1 document”, which also included the information required for an annual financial report and a management report;
- Add the information needed to transform the prospectus into a universal registration document.
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High inflation and rising interest rates create a complex environment for equities. While some companies (low debt, pricing power) might benefit, others (high debt, limited price control) could face challenges.