The steps leading up to a listing are extremely complex and demanding of management time and so KPMG Transaction Services advises clients all the way from preparation to listing.
We apply our experience to assist management through the process thereby saving time and reducing distractions from business as usual.
IPO readiness review
To prepare a company for an IPO, a readiness review should be carried out at the earliest possible stage. The review should be carried out when owners or managers are confident that an IPO will be likely in the next 2 to 3 years.
The review identifies possible weaknesses, such as the company structure, compliance with accounting best practice, tax considerations and corporate governance (including adequacy of internal control systems).
The review provides the opportunity for the company to eliminate or minimise issues early and to confirm how it wants to market itself to potential investors in a way that can optimise valuation, and maximise market demand for the company.
The end result of such a review is that a company can identify clear priorities and develop a risk managed plan to going public.
Assisting during the listing process
It is standard protocol during a listing process that the prospectus will be approved for release by the Due Diligence Committee which normally comprises a selection of the Board of Directors, together with their advisers.
Securities Regulations, together with corporate governance requirements put an obligation on the Directors to have certainty that they have adequately taken steps to ensure that the prospectus adequately discloses all of the risks faced by the business and that the prospectus is not misleading.
KPMG can assist the Directors to ensure that they have adequately identified such risks by carrying out due diligence and is also skilled in assisting companies in the preparation of the prospectus.
KPMG can advise on appropriate tax structures of the IPO vehicle to incentivise the owners and employees and optimise the attractiveness to potential investors.
Benefits of working with KPMG
- Efficient and appropriate disclosure based on a thorough knowledge of the 2009 Securities Regulations.
- Experience in balancing “marketability” and risk disclosure when drafting financial assumptions.
- Management is freed up to pursue ‘investor road-shows’ to market the offering.
- An efficient approach to meeting the deadline for submission of the draft prospectus to Companies Office.
- The ability to respond within a tight timeframe to queries from the Companies Office following submission of the draft prospectus.
- Experience and skill in finalising the prospectus within the published timeline.
Investigating accountant role
In addition to the Statutory Auditor letter in the prospectus (which confirms that the prospective financial information has been properly compiled on the basis of the assumptions) KPMG can either provide a private or a published negative assurance opinion to the company’s Due Diligence Committee on the reasonableness of the assumptions underlying the prospective financial information.
KPMG is a leader in providing this opinion in the New Zealand market.
Whilst the negative assurance opinion is required under the Australian securities regulations, there is no similar requirement under New Zealand regulations. However, it has become best practice to include this negative assurance opinion in prospectuses issued under NZ regulations.
KPMG Transaction Services is highly skilled in providing this opinion, working closely with the company’s investment bankers and lawyers in the preparation of the prospectus.
Benefits of a negative assurance opinion
- Popular with brokers / underwriters. Brokers often act as underwriters as well as providing distribution for the company’s offer. Consequently, they have to pick up any shares which are not taken up by investors. The negative assurance opinion assists in providing brokers with comfort that the business has prepared their forecasts appropriately, thereby increasing the likelihood of a successful float.
- Familiar to Trans-Tasman investors. The majority of Trans-Tasman investors are familiar with the negative assurance opinion provided by an investigating accountant and are therefore more comfortable that sufficient rigour has been included in the preparation of the prospectus.
- Provides comfort to the Directors. A negative assurance opinion on the company’s forecasts assists the Directors in proving that they have adequately fulfilled their obligations under the Securities Act. Given high profile scrutiny by the Securities Commission on Director’s fulfilling their obligations to shareholders, the negative assurance opinion continues to be an effective way of reducing both Directors’ and the Due Diligence Committee’s risks of a making a public offering.
Contact KPMG's Transaction Services
If you would like to find out more, please contact the Transactions Services team.