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Executing: The Initial Public Offering Process 

Prepare your preliminary IPO prospectus

 

The next stage in the initial public offering process is to accumulate business, financial, and other information that provides potential investors with full, true, and plain disclosure of all material facts related to the securities to be issued. This information is presented in a prospectus document.

Underwriters' due diligence

 

Your underwriters will conduct a thorough review of your company and its operations to ensure that your prospectus provides full, true, and plain disclosure. This in-depth process includes discussions with senior management, inspections of significant operating facilities, and reviews of the company itself, financial information, and material agreements.

 

Apply for a stock exchange listing

 

You will need to complete the appropriate documentation and provide the information required by the stock exchange to apply for a listing. Generally, this process runs parallel with the preparation of the preliminary prospectus and the underwriters' due diligence.

 

Regulatory review and final IPO prospectus

 

Your preliminary prospectus is filed with securities regulators in the jurisdictions in which you wish to sell securities. The securities commissions will coordinate the review of your prospectus and provide you with a letter describing any deficiencies noted in their review (referred to as a comment letter). Once the securities regulators receive satisfactory responses to these concerns, you will be in a position to file your final prospectus.

 

Marketing your IPO

 

Your prospectus is, in part, a marketing document, but it is important to augment it with other marketing tools. Once the preliminary prospectus is filed, securities legislation permits the company to commence limited selling efforts. During this period, your underwriting syndicate distributes marketing materials to potential investors and solicits expressions of interest. This process typically involves developing a road show presentation and working with your underwriters to develop a green sheet (a summary of the proposed IPO containing prospectus and other information). On the road show, you sell your story to potential investors.

 

Pricing your initial public offering

 

Since pricing reflects the market's valuation of your company, you should monitor market conditions, comparable companies, and your IPO's potential pricing throughout the process of going public. This activity will culminate in a round of final negotiations with your underwriters in the day or two prior to filing your final prospectus. At this point, you are reasonably certain you can complete your initial public offering.

 

Finalize documents

 

With the final terms of the offering now complete, you update your prospectus to reflect the pricing information and address changes required to satisfy regulatory bodies. When your team is satisfied with the final prospectus, you file it, along with certain other information, with the relevant securities commissions. Once you obtain receipts from these commissions, your underwriters are able to sell your securities.

 

The closing and life as a public company

 

The closing meeting signifies the successful completion of your offering. You receive the proceeds of your IPO in exchange for shares of your company. The closing also concludes the going public process. You begin your life as a public company and assume the increased accountabilities that exist in the public domain.

 

You've completed the process of IPO, but how do you transition successfully to operating as a public company?

 

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Going Public

 

A Guide to Going public [PDF 1.83MB] highlights the process of going public, including your role and those of your executives and external advisers. 

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Salma Salman

Salma Salman

Partner, National IPO Practice Leader, Audit

416-777-8285

Canadian IPO Champions

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