The report finds that the majority of senior company executives across Europe spend well over half their time managing the IPO process. Many of the stages in this process are considered more difficult than expected and four out of ten deals end up running behind schedule.
The findings are contained in a report Thinking about an IPO?, published by KPMG transaction services, which includes the results of a survey of directors of 77 companies across Europe that have listed since January 1, 2002 conducted by MORI. Of these, 48 obtained their listing in 2004.
The IPO process can be hugely time-consuming for executives. Over 60% of chief executives and 81% of finance directors spend over half their time focusing on the IPO and in more extreme cases, as many as 36% of chief executives and 50% of finance directors spent over three quarters of their time on preparation in the run up to the IPO.
The report also found that preparation and verification of the prospectus, due diligence, and marketing are the most challenging aspects of the IPO process. Respondents consistently said these three areas were more difficult and time-consuming than they had expected.
Nearly four out of ten companies took longer than expected to complete the IPO. The four main reasons were: issues uncovered during due diligence; changing market conditions; unrealistic timetables and the complexity of preparing the financial track record.
Linda Main, partner of KPMG transaction services, said: “The process of floating a business is not simply about appointing advisers and selling a company in its current state to the public markets. Most companies will need to do a lot of legwork to get them into shape, especially if they have not involved professional outside investors in the past. Frequently this will be more than management had expected and the level of work in making these changes can come as a surprise.”