Corporate Finance lawyer, Joseph Chiummiento, of Core Lawyers, provides insights on the process of taking your company public, and an IPO test you may find useful.

As lawyers, we are either asked to help our clients make decisions or asked to help our clients execute decisions they have made. In making a decision most CEO’s and CFO’s want to understand the impacts of their decisions, what to expect and how the decisions will bring them closer to their objective. Making the right decisions through the IPO process can mean the difference between success and failure, and three important decisions in that process include:

• What is your big idea?
• How to build a team to take my company public?
• What do you need to go public?

Try the IPO test to determine if your company is ready to go public.

What is your big idea

Many CEO’s of startups or early-stage public companies look to create a big blue sky idea that investors or future investors will resonate with, and usually something that has a basis of believable to it. What should be avoided is too many ideas being thrown into the mix as investors are usually scared by what they perceive as lack of focus or too many distractions.

Narrowing down the big idea is part of the IPO test.

Some of the most successful businesses and management teams we have worked with started with what they believed. For example, communicating what you “believe” will happen two years from now in the “Cannabis Industry” or the “Artificial Intelligence Space” or the “Blockchain World” and how your big idea will cause incremental, beneficial or significant change helps create the opportunity for growth. Start with what you believe and not what you think others around you think you should believe and your business plan will unfold easily.

How to build a team to take my company public

When you start with what you believe you will find that your message resonates with your team, your investors (for the most part) and all of those around you. The IPO process can be a fun, exhilarating, adrenaline-based roller coaster ride, and achieving your business goals with a team that shares your beliefs, and has bought into the vision can be extremely rewarding.

Some key questions to ask yourself about your team are:

1. Who is the most knowledgeable in the group about the IPO process or growth process?
2. Who has been through the process of asking others for money?
3. Are you surrounding yourself with team members that are not as smart, not as resourceful, simple “yes” men, or are they smarter and capable of challenging you for growth?
4. Who on your team is ego driven, needs to be right all the time, and is driven by their own personal needs rather then the team?
5. What is your score as a team (rate your team out of 10) and be honest about your weaknesses.
6. What are the individual scores of your key team members?
7. What are the resources available to you from your team members – their contacts or abilities or resources? What is their best possible contribution?

Answering the above questions can be an eye-opening experience that suddenly brings the forest you were missing through the trees and to the forefront – and the numbers don’t lie.

What do we need to go public?

This is probably the easiest step in the IPO process compared to the two above. In Canada, each stock exchange will publish what they require as the “minimum listing requirements” and most of this information is available on their websites. The first step is to pick and understand what sector your company will operate in and then to understand the requirements your company has to meet to be public. This may mean that a tech company has a different test than a cannabis company or a mining company, however, this is where you start with the goal in mind and build your big idea to meet this test.

Once you have the test in mind, clear beliefs and vision, build the Board of Directors and the management team you feel is best suited to execute on this opportunity. Staying focused will drive the team and create excitement, and the money should follow.

For more information on the listing requirements call the exchanges you are interested in and they will provide you with all the information you need. The CSE, TSX Venture Exchange, the TSX and NEX are all good starting points in your research and development.