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  • Writer's pictureKatrina Nacci, CPA

Discussion on UK vs. US IPOs with Startup CFOs

At the beginning of May, I spoke at a workshop for European CFOs looking to do an IPO. There was a BDO partner who spoke on the UK IPO process, and then I layered in on top some of the accounting & reporting nuances of doing an IPO in the US.


It was a really interesting chat, as we had some candid back & forth between the BDO Partner & myself to understand where some of the differences lie between UK & US IPOs.


Here were some of the top takeaways:


1. ๐—œ๐˜'๐˜€ ๐—ฒ๐—ฎ๐˜€๐—ถ๐—ฒ๐—ฟ ๐—ณ๐—ผ๐—ฟ ๐˜€๐—บ๐—ฎ๐—น๐—น ๐—ฐ๐—ผ๐—บ๐—ฝ๐—ฎ๐—ป๐—ถ๐—ฒ๐˜€ ๐˜๐—ผ ๐—น๐—ถ๐˜€๐˜ ๐—ถ๐—ป ๐˜๐—ต๐—ฒ ๐—จ๐—ž: London has the AIM exchange meant for smaller companies. The US doesn't really have a similar concept, so in general, you need to have a larger market cap to think about a US IPO.

2. ๐—จ๐—ฆ ๐—ถ๐—ป๐˜ƒ๐—ฒ๐˜€๐˜๐—ผ๐—ฟ๐˜€ ๐—ฎ๐—ฟ๐—ฒ ๐—บ๐—ผ๐—ฟ๐—ฒ ๐—ผ๐—ฝ๐—ฒ๐—ป ๐˜๐—ผ ๐—ฝ๐—ฟ๐—ฒ-๐—ฟ๐—ฒ๐˜ƒ๐—ฒ๐—ป๐˜‚๐—ฒ ๐—ฐ๐—ผ๐—บ๐—ฝ๐—ฎ๐—ป๐—ถ๐—ฒ๐˜€: This is why a lot of biotechs list in NASDAQ, it may be more appealing to some start up tech companies as well, so long as your equity story can still compel a large enough investment

3. ๐—ช๐—ต๐—ถ๐—น๐—ฒ ๐˜๐—ต๐—ฒ ๐—จ๐—ž ๐—ต๐—ฎ๐˜€ ๐˜๐—ต๐—ฒ ๐—™๐—–๐—”, ๐˜๐—ต๐—ฒ ๐—ฆ๐—˜๐—– ๐—ฝ๐—ฟ๐—ผ๐—ฐ๐—ฒ๐˜€๐˜€ ๐—ฐ๐—ฎ๐—ป ๐—ฏ๐—ฒ ๐—บ๐—ผ๐—ฟ๐—ฒ ๐—ถ๐—ป๐˜๐—ถ๐—บ๐—ถ๐—ฑ๐—ฎ๐˜๐—ถ๐—ป๐—ด: your offering document will have to go through review with either of the regulators in your IPO, however the SEC is definitely seen as a more menacing force. Companies will want to allocate a longer IPO timeline to getting through rounds of their comments to get disclosures up-to-par. There is a better business case here for bringing in an independent IPO advisor to make sure your disclosures are best practice, and hopefully keep the comments to a minimum.

4. ๐—œ๐—ป๐˜๐—ฒ๐—ฟ๐—ป๐—ฎ๐—น ๐—ฐ๐—ผ๐—ป๐˜๐—ฟ๐—ผ๐—น๐˜€ ๐—ป๐—ฒ๐—ฒ๐—ฑ ๐˜๐—ผ ๐—ฏ๐—ฒ ๐—ฎ๐—ฑ๐—ฑ๐—ฟ๐—ฒ๐˜€๐˜€๐—ฒ๐—ฑ, ๐—ป๐—ผ ๐—บ๐—ฎ๐˜๐˜๐—ฒ๐—ฟ ๐˜„๐—ต๐—ฒ๐—ฟ๐—ฒ ๐˜†๐—ผ๐˜‚ ๐—ด๐—ผ: Sure SOX is seen as a 4 (ehrm 3)-letter-word around US IPOs, but the UK also addresses controls by way of other reporting requirements during IPO, such as having ICFR stood up to support the FPPP report that a UK reporting accountant writes.

5. ๐—š๐—ฒ๐˜ ๐—ฟ๐—ฒ๐—ฎ๐—ฑ๐˜† ๐—ณ๐—ผ๐—ฟ ๐˜๐—ต๐—ฎ๐˜ ๐—š๐—”๐—”๐—ฃ ๐—ฐ๐—ผ๐—ป๐˜ƒ๐—ฒ๐—ฟ๐˜€๐—ถ๐—ผ๐—ป: A lot of UK private companies are still using UK GAAP. You will likely need IFRS for a UK listing. And if you'll meet the requirements for an FPI in the US, you'd get to use IFRS there as well!


Do you have any specific questions on these differences? Happy to dive in further in a follow-up post!

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