2015 has been a good year for IPOs in Australia, with a number of sizeable listings, including the recent $2.3 billion listing of Link Group.  It has also seen a continuation in the trend of small and mid cap technology companies finding their place on the Australian Securities Exchange (ASX).    

The technology, media and telecommunications (TMT) industry has had a strong run of listings in 2015, including the $2.1 billion listing of accounting software developer MYOB Group earlier this year.  

We have also experienced a steady stream of IPO activity, including advising on 4 IPOs in the TMT space this year (for OtherLevels, Superloop, Over the Wire, and Megaport).  With our involvement on a number of floats, we have also continued to see strong appetite from institutions as well as retail investors, validated through an increase in broker-firm offer rounds which are steadily becoming a recognised feature of many offers.  

For a company at the right stage of development, there are a number of advantages to being listed.  An IPO presents an attractive option to raising growth capital and increasing a company’ profile.  However, there is far more to a successful IPO than market timing alone.  

Set out below are some tips for companies that may be considering an IPO.  

Plan for the IPO

A company should allow four to six months for the completion of the IPO process (and potentially more time depending on the complexity and scale of the capital raising).  

Be ready to float

Act like a listed company ahead of time.  Some tips include:

  • operating as if a public company ahead of time (and converting from a proprietary company at the right time if needed)
  • ensure the board has an appropriate spread of independent non-executive directors with a mix of expertise
  • analyse and critique the company’s governance culture and implement new practices where necessary to do so
  • ensure the company’s financial information is on track.  If the company intends to list under ASX's profit test, it will need to provide unqualified audited financial statements for the past three years, and
  • review the company’s D&O insurance arrangements.

Take note of ASX listing requirements

  • will the company fall under the profit test or asset test?  Note the specific requirements of each test under the ASX Listing Rules, and
  • take note of the spread requirements for listing (a minimum of between 300 and 400 holders depending on the number of shares held by related parties).

Assess the cost and viability of listing

  • assess the costs of underwriters, accountants, corporate advisers and legal advisers, and
  • take into account fees for initial listing fees, annual listing fees and other administrative fees (e.g. prospectus printing).

Get the right team

  • in addition to appropriate advisers, it is equally important to ensure sufficient resources are available to maintain the day-to-day business of the company while the board and management are focused on the IPO.

Consider existing shareholders

  • educate existing shareholders on the potential for all or a portion of their shares to be subject to escrow restrictions
  • consider whether any shareholders wish to sell all or part of their holding as part of the IPO, and
  • consider expectations of shareholders after listing (e.g. profitability and dividends) and how this fits in with the company’s business plan.

Consider incentive and share option plans

  • both long and short-term incentive plans should appropriately incentivise and reward key employees, while managing tax outcomes for both the company and its employees.

Critically evaluate the company’s business model

  • including key model dependencies of the business and risks specific to the business.

Take care with prospectus drafting

  • ensure clear, concise and effective writing
  • provide investors and their advisers with all the information they would reasonably require to make an informed assessment on:
    • rights and liabilities attaching to the securities being offered, and
    • assets and liabilities, financial position and performance, profits and losses and prospects of the company.
  • have appropriate due diligence and verification procedures.

Consider the use of investor presentation and pre-marketing

  • consider the potential for an investor presentation and/or pathfinder prospectus.
  • ensure consideration is made with regard to IPO advertising restrictions.
  • if pre-marketing materials will be used, commence the due diligence and verification process early.
  • ensure continuity of the company’s message between pre-marketing materials and the prospectus.

Determine the offer structure


  • public or broker firm offer?
  • priority offers such as an employee priority round, and
  • if the offer will include a sell down of existing shareholders’ shares.

You should carefully evaluate whether your business is ‘IPO ready’ having regard to the factors above and implement any necessary changes to your business now, to assist with the IPO process.