The organization
Preparing a Canadian midmarket manufacturer for an IPO
This large manufacturing client approached BDO because they wanted to go public in Canada. With an annual revenue of $60 million plus and annual growth plans of over 30%, this manufacturing company saw going public as a route to support their goals.
The challenge
When the manufacturer came to BDO seeking help, they were looking at a pathway to growth that would allow them to go public in Canada through an IPO—supporting growth and expansion plans. But the company founders, executive team, and finance team had no experience with operating a public company.
The finance team was relatively small, and their experience revolved around preparing ASPE financial statements on an annual basis to meet banking requirements. The team lacked knowledge of IFRS, and the demanding reporting requirements of a public company.
The client knew there were gaps to achieving their goals and wanted support to prepare for the process of going public.
The solution
BDO’s IPO readiness team, which offers go-public advisory services, took the client through an in-depth planning and implementation process to prepare the manufacturing client for an IPO.
The first step was a Go Public Readiness Gap Analysis working session with the founders and finance team to identify gaps in the company’s ability to operate successfully as a public company. From the review, BDO identified the following gaps:
- Valuation of company – They needed to better understand how the market would price the business to be better equipped with information to negotiate pricing
- Value enhancement – They needed a thorough understanding of the operational changes that would improve the business’ valuation on a go-forward basis
- Pre-listing tax planning for the founders and key executives in the form of share-based compensation planning
- The need to further explore alternatives to becoming a publicly traded listing that may also meet client needs
- Current internal controls and governance processes
- Understanding of the listing process including:
- The process for converting ASPE financial statements to IFRS
- The listing requirements for audited financial statements under IFRS
- Interim financial statements including understanding timelines associated with things getting “stale dated”
Together BDO and the manufacturing client developed a two-year go public roadmap. It included timelines and deliverables to give the client the tools and knowledge to achieve their goals.
The outcome & benefits
The BDO team was able to help this manufacturing client gain a much deeper understanding of what’s involved in the listing process for going public. The company’s management learned what it takes to operate successfully as a public company, and acquire the tools to achieve the operational readiness to become a listed company.
The Go IPO roadmap provided the founders, executives, and finance team milestone tasks that needed to be reached over the course of two years for an orderly listing process. They are currently working through the plan’s goals now with BDO, including:
- Converting their financial statements to IFRS
- Reviewing and assessing their current and go forward corporate governance structure
- Tax planning for the owners
- Preparing business plan and projections
The early identification of gaps and having a plan to tackle each item gave the founders and executive team the confidence to proceed with a go-public transaction in the near future and meet their goals for growth.
Contact
Using a go public option to grow is a development that often requires knowledge of processes, financial reporting, and governance that falls outside the experience of a company’s team. Our team has the understanding and skill to guide you through the process.