Mountain road surrounded by forests

How to prepare for listing on the Nordic markets

12 ways for companies to prepare

Paul Blythe, Partner, Corporate Finance
Mountain road surrounded by forests
Achieving a successful listing on the Nordic Markets

In a recent pre-election seminar, national audit, tax and advisory firm, Crowe UK, Law firm Child & Child, and corporate advisors Keswick Global, discussed the key elements of the NADSAQ Nordic Stock Market (NADSAQ) – the second-largest exchange in the world by market capitalisation. The event featured a host of influential firms and advisors, including companies who are currently listed on NASDAQ as well as a variety of potential entrants and advisors, all seeking specialist information about NADSAQ and its offering.

What companies need for listing

Those companies that (1) meet the key requirement of quality, (2) are establishing sound governance procedures, and (3) are willing to be realistic on entry values, are realising that market valuation ultimately comes from investor confidence and sustained financial performance, not location.

Crowe London Corporate Finance Partner Paul Blythe noted: "Management teams of emerging companies are increasingly looking for listing choices in Europe."

He continued: "Investors in smaller public companies want to see a growing business operating in expanding markets, ideally with International exposure and a sustainable competitive position and NASDAQ Nordic gives them these."

NASDAQ Nordic is currently the home of 720 listed companies, and NASDAQ is Europe’s most active exchange in 2016, in terms of proceeds and number of IPOs raising £7.9 billion euros from 80 IPOs.

The admission process is relatively straight forward and the ongoing obligations for listed companies are not onerous. Liquidity varied between companies depending on free float and the level of market engagement. Some companies might use the market as a route to the NASDAQ market in the US, while others meet all their objectives by staying on the market or transition in the future to European Exchanges.

Improving the quality of your profits

So how can companies who are considering a listing on the Nordic markets and want to raise capital from local investors seek to improve the 'quality' of their profits?

Robin Stevens, Head of Capital Markets at Crowe UK, shared his view on the investor-ready issues that are key for achieving a successful admission to NASDAQ.

12 key ways to prepare for listing

  1. Build a strong and complete management team with clear succession planning
  2. Develop a scalable business model, growing organically or by acquisition
  3. Where possible move to higher value and higher margin products
  4. Build barriers to entry based on technical excellence, market knowledge or scale
  5. Establish a robust and reliable accounting and management information system
  6. Enhance corporate governance and appoint non-executive directors
  7. Restructure or reorganise the business into a formal group structure where necessary
  8. Consider share incentives to retain and attract key staff
  9. Ensure the business has defendable rights over intellectual property
  10. Reduce dependencies on particular customers, products and staff
  11. Review and improve terms of trade and strengthen credit management
  12. Appoint experienced advisors

Robin Stevens said: "There is no short cut to a successful IPO or capital market transaction. Companies and advisor teams that underestimate the transition issues from a private to a public company are likely to disappoint investors and regulators alike. The phrase 'fail to plan and plan to fail' is not out of place in this instance."

NASDAQ Nordic is not the answer to every company's IPO quest, but some businesses may well navigate a new 'North-West Passage' to US capital markets via the emerging and engaging Nordic exchanges.

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Paul Blythe
Paul Blythe
Partner, Corporate Finance