If the 2021 IPO figures are dizzying, driven by the profusion of liquidity available on the market, there are still many constraints and an IPO is not successful (only) by simply crossing your fingers. Here is the to-do list for the sprint to the IPO.
26 million euros raised by Waga Energy in October 2021, 70 by Afyren the same month, 300 by Believe earlier this year, 5 million by Boa Concept ... Successful IPOs are far from being out of reach for start-ups. Provided they are well prepared.
1) Rely on a team of competent experts who are close to your values
"This is one of the main factors for the success of our IPO," insists Jérôme Caron, administrative and financial director of the Vendée-based start-up Hoffmann Green Cement Technologies (40 employees / 2021 sales: around €6 million), manufacturer of an innovative low-carbon concrete made from industrial waste powder. It has raised a record €75 million in 2019. "We picked the brokeur first, then the law firm, the financial communication agency, etc. We had interviewed them. This selection is essential because they are the ones who will accompany you towards success thanks to their experience. But be careful, beyond their reputation and skills, you must also retain teams with whom you get along well." Tip validated by Eric Forest, Deloitte Private partner and co-author of the guide "How to prepare your IPO" produced in partnership with The Galion Project and Euronext. "The CFO and the CEO must feel at ease, in order to be able to be challenged, to exchange freely." The Deloitte expert also insists on the opportunity to be accompanied, in addition to the mandatory experts (lawyers, investment bank, auditor, communication agency) by an equity advisor who will provide advice throughout the process.
And even before using these experts, the training courses (free for start-ups) offered by Euronext can be an interesting first approach to the subject.
2) Structure yourself to meet the expectations of stock market investors
The second step on the road to the IPO is structuring. "Start-ups listed on the stock market are often young companies that have grown up quickly without necessarily having had the time and means to structure themselves. With the IPO, this is essential", continues Eric Forest. The expert recommends that a global diagnosis of the state of the company in relation to the standard expectations of the market be carried out beforehand. In terms of legal organization, governance, internal control, communication, reporting or standardization of accounts for example. "This is the time to staff the finance, communication, and legal departments in particular because the IPO requires a time-consuming upgrade to standards," emphasizes Thierry Lambert, CFO of Theranexus, a biotech company listed on the stock market since late 2018. "For example, for Theranexus, we had to go from SAS to SA".
Recruiting a CFO is almost unavoidable, if possible as early as possible in the final sprint. "It's not mandatory but I don't see an IPO done without a CFO, a key player in the process and the bearer of many technical issues," observes Eric Forest.
On the other hand, it is clearly not mandatory to recruit an experienced professional on this subject. Chloé Clair, CEO of the recently listed start-up Namr (see box) confirms: "Our CFO, recruited 15 days before the decision to launch the IPO, had never done one. However, he had the necessary technical skills, acquired during his career. Beyond the expertise, the manager insists on the need to form a CEO/CFO pairing that works perfectly, because the time spent together during the process amounts to hundreds of hours. And it is this pairing that investors will rely on.
Counter-example nevertheless: that of the Lyon start-up Kumulus Vape, specializing in online sales of products related to the electronic cigarette (57 employees; CA 2020: € 22 million). It was introduced on Euronext Growth last spring without a CFO (after being present on Euronext Access since 2019). Nevertheless, it must staff this position in the next few weeks. "It may seem weird but we were very well equipped on financial management and until now we have been able to manage without a CFO, with outsourced accounting," says the company's CEO, Remi Baert.
3) Build your strategy and be able to convince investors
And the last but not the least: the obligation to draw up regulatory documents. And therefore to put a clear strategy in black and white, understandable by all. "This step is very heavy, the documents are several hundred pages long, but it has the merit of forcing governance to ask itself very precise questions about the future," emphasizes Jérôme Caron, Hoffmann's CFO. Once this step is completed, it will then be necessary to be able to present the strategy on several occasions during the presentations traditionally given by the CEO/CFO team. Remi Baert, the director of Kumulus Vape, readily admits that he was supported by his Listing Sponsor in this process. "We rehearsed several times, especially for the Grand Oral before Euronext because this step is delicate". Eric Forest, the Deloitte expert, confides that he has already seen presentations that were not sufficiently prepared. "You can feel it when the manager or the CFO are not well prepared. You must not neglect this phase because you will not have several opportunities to convince investors."