1. Selection of Issue Manager and Advisors

• Issue Manager: Appoint a reputable issue manager or lead underwriter to handle the end-to-end IPO process. They provide crucial guidance on the structure, pricing, and promotion of the issue.
• Supporting Advisors: Hire experienced legal, financial, and audit advisors. Their expertise ensures compliance, regulatory filing accuracy, and financial transparency, which are essential to meet public market requirements.

2. Pre-IPO Audit and Due Diligence

• Financial Due Diligence: Conduct thorough audits of financials and ensure multi-year statements are accurate and transparent. This reassures potential investors of the company’s financial health.
• Legal Due Diligence: Ensure all licenses, intellectual property rights, contracts, and legal structures are in order. Any unresolved legal issues must be addressed before proceeding to avoid future liabilities.
• Operational Due Diligence: Review key operational aspects such as supply chains, production processes, and business continuity plans, providing investors with confidence in operational resilience.

3. Valuation and Pricing

• Valuation Strategy: Work with financial advisors to conduct a preliminary valuation based on future earnings, market position, and growth potential. This includes benchmarking against similar companies in the sector.
• Pricing Method: Decide on an appropriate pricing mechanism—fixed price, book-building, or hybrid method—based on market conditions and investor demand. For SMEs, careful pricing is essential, as excessive valuations may deter interest, while underpricing can lead to undervaluation.

4. Regulatory Compliance and Documentation

• Drafting the Prospectus: The issue manager and legal advisors assist in creating a comprehensive prospectus. This document outlines the company’s business model, financial performance, risks, and proposed use of IPO proceeds, which provides transparency for potential investors.
• Regulatory Filings: Submit filings to the relevant securities regulators and respond to any queries to ensure regulatory compliance. In some jurisdictions, this includes obtaining approval from local SME boards or alternative trading platforms specifically designed for smaller companies.
• Listing Application: Complete the application to list on the chosen exchange, ensuring compliance with listing requirements specific to SMEs, as these may differ from those for larger companies.

5. Marketing and Promotion

• Pre-Marketing and Roadshow: Organize a roadshow, where management presents the business to potential institutional investors. For SMEs, this stage helps to build awareness and generate interest due to limited brand recognition.
• Investor Presentation: Prepare materials highlighting the company’s strengths, growth potential, and the market opportunity. For SMEs, a strong, clear value proposition is crucial to attract investor interest.
• Public Relations and Media Outreach: Engage in public relations efforts to increase media coverage and raise awareness among retail investors, who are often a key investor group for SMEs.

6. Book-Building and Demand Assessment

• Book-Building Process: If using the book-building method, gauge investor demand through bids received during the process. The issue manager typically handles this, coordinating with institutional investors and assessing interest levels.
• Adjusting the Price Band: Based on demand, adjust the IPO price within a pre-determined range. Effective book-building helps SMEs set an optimal price that balances investor demand with fair company valuation.

7. IPO Pricing and Allocation

• Final Price Decision: After the book-building process, determine the final IPO price, based on demand, market sentiment, and SME growth prospects.
• Allotment and Allocation: Allocate shares to institutional and retail investors, ensuring regulatory compliance with SME-focused investor caps or restrictions.

8. Launch and Listing Day Preparations

• IPO Launch: Coordinate with the stock exchange on the listing day to manage all logistics. This includes aligning with trading partners and ensuring any required opening ceremonies or publicity events are well-prepared.
• Post-Listing Stability: The issue manager may help stabilize share price post-IPO to maintain investor confidence, especially important for SMEs due to lower initial liquidity.