Going public can make you a better company in the long run

London’s stock markets were once the pride of the UK’s financial system helping to make the UK one of the world’s most important financial centres with lively markets supporting a broad range of local and international businesses. However, with London’s increasingly anaemic performance, especially when it comes to IPO activity in the last few years, many companies have increasingly preferred to remain private. If the media are to be believed, the IPO party is over…but is it really? 

Last week the SEC Newgate team partnered with the London Stock Exchange for its IPO forum which, according to the media mood music, could have been a glum affair, but despite the early winter gloom there was a sense of fresh enthusiasm from many of the panellists and companies in attendance. Contrary to the popular narrative, the case for going public in London remains surprisingly strong. 

Opening proceedings was Citi’s UK Head of Investment Banking, James Fleming who showed some compelling evidence that the IPO market is set for a return to form in 2025/26. Fleming believes we are at the start of next IPO cycle in the UK, the economic macro picture is improving, the UK is politically stable (compared to much of Europe), valuations have been steadily ticking up, Private Equity has a large pent-up supply of companies and the UK benefits from some of the best and fit for purpose financial regulation globally.  

So why list at all? 

Listing on any stock exchange is no walk in the park and the LSE is no exception - it’s a massive amount of work for any executive management team. The clear message that came through from all the panellists is that whilst it can be a challenging process at times, it transforms you into a significantly ‘better’ and more sustainable company in the long run. 

In effect, it forces you to grow up and fast. You have to get a proper board and governance structure in place and professionalise your finance function, operations and stakeholder relationships. There are other benefits too, raising new money is often simpler and easier, you can clear up that complicated cap table and have just one class of share. Listing also provides a huge boost to your credibility and profile which means you can attract better talent and bigger customers.  

Why London? 

The answer to this one is fairly simple. The media often likes to make a song and dance about large companies choosing to list in New York over London, the argument being the markets are more dynamic particularly for those in tech related sectors. However, many of the panellists were at pains to point out that for any company likely to be valued under $5bn this is misleading. According to Ian Newton, Senior IPO Adviser to CEO & Board at Raspberry Pi, the simple fact is that on Nasdaq you will be a minnow in an ocean and will go largely unnoticed. Furthermore, from a reporting perspective London is much more appropriate to smaller higher growth companies than the big US exchanges.

Things to think about 

For those thinking about taking the plunge the collective wisdom of the panelists who had been through the process can be summarised as follows. The first is to really start to think about the governance of your company, by starting to act like a listed company in terms of internal culture and process well before you intend to list as it will save you a lot of time and pain later on. The second is to verify, validate and collectivise information and data points used by everyone across the company. Lots of companies have a surprising number of incorrect narratives or data points that they use which will be called into question. Finally, agree and embed a clear, compelling and differentiated equity story across the business that you can tell to both sophisticated and the layman alike. 

As the former CEO of Boku, Jon Prideaux, put it the relationship with your investors as a private company as akin to being ‘married’ whilst being listed was more like ‘dating’ there is.