Lifecycle of a Business - Going Public
BLM's Lifecycle of a Business series captures key elements of a business's growth story - from the highs of formation right through to lows of dissolution. Our experts’ advice and knowledge will help guide you to understand and deal with litigation risks.
Listing your company’s shares on a stock exchange can rightly be a daunting prospect, but the opportunity to use this flotation to kick-start a phase of growth is a tempting one. Doing so can also subject your business to new and exciting partnerships with investors and other businesses, raising its profile amongst the market. However it is no simple task and it must also be a carefully considered strategy for the business and one that is taken for the right reasons.
The process of getting to the listing stage, otherwise known as the Initial Public Offering (IPO), is a time-consuming stage for the management of the business and so there must be appropriate planning in place to account for the inevitable strain on resources required to reach the goal of flotation.
With such high rewards at stake comes the risk of things going wrong. There is also the risk of not being adequately prepared for the popularity of the flotation and often great success can be a catalyst for disagreements and commercial disputes as people position themselves favourably and attempt to take advantage of the financial boost. Then, even once a flotation is successful, the new phase for the business begins in order to properly invest the raised capital in accordance with its plans. However, clear direction and strategy, even when intricately planned, are not always simple to execute amongst the fervour of success. The new positioning as a publicly traded company brings increased oversight and speculation and there may be a body of investors keen on ensuring that their alternate strategy is implemented or discussed at board level. Therefore, litigation risk may well present itself from an angle that you would not need to have considered in the same way as when running a private company. The truth is, running a public company and running a private company are entirely different occupations, so having the correct professional advice available to you at all times is going to prove crucial to the long-term success of a public company.
Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to clients of BLM. Specialist legal advice should always be sought in any particular case.