Annika Sigfrid has been at the center of more IPOs than most of us will ever be. She has 25 years’ experience in Equity Capital Markets transactions. In her last role she was Global Head of ECM at Nordea, a leading Nordic investment bank. She is now an independent adviser and board member, working with companies on their governance and preparation of their IPOs.

With Annika we go deeper into the topic of IPOs of family-owned companies, which take a significant step as they decide to become listed, with the greater exposure that this entails. We also discuss the transparency and govnernance requirements of being a listed company.

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Per: Today, we will talk with Annika Sigfrid, a seasoned Nordic ECM Banker. Annika has 25 years experience in equity capital markets, having advised companies and shareholders at investment banks, Merrill Lynch, Carnegie, ABG and Nordea. Now, she’s an independent advisor and board member. It’s safe to say Annika has been at the center of more IPOs than most of us will ever be. The Nordic markets are interesting because they punched above their weight In terms of IPO volumes.

During the last five years, the Nordics represented 23% of all European IPO volumes versus the Nordic weight of only 12% in the MSCI Europe Index. The Nordics also has an overweight of family-owned companies listing on the stock exchange, and Annika will share with us her experience working with such companies. Before we start, we would like to remind our listeners that our discussion is not an investment accommodation. Amundsen Investment Management, and the participants on this podcast may have holdings in the companies being discussed.

Gautier: Annika, thank you very much for being on the show today. We are very happy to have you. It’s a pleasure that you can participate to this podcast, and maybe we should start by letting you introducing yourself, please.

Annika: Yes. My name is Annika Sigfrid, I’m 48 years old. I’m Swedish, and I have, I would say, plus 25 years of experience in investment banking. Since 2002, I have worked, especially with Equity Capital Markets transactions called ECM in a shorter version. I worked at both Nordic and international banks until recently, I was the global head of ECM at Nordea. Nowadays, I’m working as an independent advisor, and that is working together with companies in ECM transactions.

Advising the board, the management team, and the owners on the transactions and the journey, for example, for an IPO. ECM includes several products. The largest product is the IPO, the Initial Public Offering. It’s new issues, it’s accelerated book buildings, it’s placings, it’s private placements, it’s share buybacks. Everything basically that includes the share in a corporate finance transaction.

Gautier: Do you have mostly an experience with the Nordic markets? Obviously, you say you’re Swedish, you work with Nordea, you have had a bit of a more European experience with IPOs and ECM in general.

Annika: Yes. Primarily, I work on Nordic transactions, but as working at Nordea, we also had exposures in some of the European companies. Where we also then were participating in, for example, Deutsche Bank, rights issue, et cetera. The focus has always been on Nordic companies and Nordic transactions.

Gautier: Obviously, the topic of the podcast today, will be to talk about advising family-owned companies with respect to their capital market considerations and IPOs. Obviously, Sweden and the Nordics but also Europe, Germany, for example, homes of a lot of family-owned companies. We tend to see them at some point in their development past, thinking about IPOing and becoming public. Do you have yourself a lot of experience with those family-owned companies? If you can just tell us a bit more about your background from that respect.

Annika: Yes, I have experience from working with family-owned businesses. However, I would say that the majority of the IPOs in the Nordic market, if you look historically, have been private equity-backed transactions. I’ve done a number of family-owned or entrepreneurial/founder-led transactions as well. There could also be a situation where you have a family who have teamed up together with the private equity, and then pursuing an IPO as an exit.

For example, Oriflame that we IPO’d in 2004 is a very good example of such a transaction. Where then the private equity owner, of course, exits full over time, but the family stays as an owner in the company. Pure family-owned transaction, for example, Mekonomen is a good example of that. That’s very long back in time. Otherwise, entrepreneurial/founder-led transactions like trade up, Tradabler, Volati, Bettercollective, et cetera. I would say the majority of the transactions executed have been by private equity owners.

Gautier: Obviously, and the PE fascial sponsors was very active in the Nordics. They’ve been the main source of IPOs for the last couple of years for sure. We still see a lot of those, you mentioned founder-led or family-led companies also being an important source of IPOs in Europe. I guess an interesting question is when those family-owned companies start thinking about being public, what’s happening internally? At the ownership level, generational level, so that timing is right for those companies to start asking themselves the question, should we start being public?

Annika: Yes, it’s very good question. I think it could be one or several reasons for a private company or family-owned company to pursue an IPO. One could be that they feel that they need to have some risk-sharing. They have all the egg in one basket, the wealth that they have in the same company. This is a way for them to sell some shares and get some more, lower the risk of not having it in only one company.

Another thing could be that they are looking to expand, acquire a company or a more aggressive strategy of growth where they need to access the capital market for funding i.e. doing a new issue, bringing in new investors to continue the journey of growth. I think another thing could be as well a way of succession in the company. That there is maybe one or two generations that have led the company, and there is no natural person entirely in the family to take off the company’s forward journey.

Thereby also bringing in new people in the company, but also then expanding the ownership base for the company’s next step in their strategy. Another thing could be that if it is a product or a service that is customer oriented, that this is a way to also invite their customers to be part of a profitable forward journey. I.e. taking part of the profits and dividend generation in the company.

Basically, profit sharing, but it could also be with the employees. That they want to invite the employees to be more part of their sharing of the profit and the returns in the future. It could also be ingredients like increased transparency, marketing of the company that it’s easier to employ good people if the company is publicly listed and have more, what you say, public exposure and public knowledge.

Gautier: All that’s very valid reasons, obviously, to consider a listing. Do you think any of them are easier to sell to the market, or market would be more receptive to some of those different considerations as opposed to, for example, raising funds for growth and M&A, versus just monetizing some of your wealths as a family. How did you perceive the market reactions to those family-owned companies’ IPOs?

Annika: Yes, overall in a transaction, in an IPO, the key thing is the investment case. There’s so many factors that come into play when you look at the company or looking to buy a stock. I think the most important thing is that the investor like the stored investment case. I think some investors clearly express that they like if the owners are of flesh or blood, so to speak.

They also then share of course more of the risk in the company. Primarily the financial risk going forward, but also that they take more responsibility for the operational risk at the company, if they also have a lot of financial exposure to the performance of the company. I think the investment case overall is always the prime. Of course, having some flesh and blood in the ownership is always a plus, I would say.

Gautier: Anything which might put this family-owned company in a situation where they’re not sure if the IPO is the right step for the company? We know a lot of those companies when they come to the market, they might suffer with low liquidity or low visibility from the market, because it always takes a bit of time to be properly covered.

We know there’s been a trend as well, unfortunately, over the last few years of this equitization with just fewer and fewer listed companies, right? Is it the worry and the concern for those family-owned companies that actually being public might not be the solution from a liquidity perspective or the right step for them, and they might just consider the private sale or the financial sponsors’ exit?

Annika: No, but I think this is the key question. The first question you will have to ask a client coming for you, asking for advice is that, “Why do you want pursue an IPO? What is the prime reason? Is it because you want to sell some shares, i.e. part of the ownership base or one owner want to do a full or partial exit, and that is the reason for the IPO? Is it because you want to access the capital market for funding”? I had a case once a company that came to us, they had no need for primary, and there were no one in the ownership base that wanted to sell some stock.

Of course, that is a very complicated situation to do a public listing. I think that is the primary reason. It is why to do an IPO. I think many companies have it as a bit of a self-fulfillment. That you just think that the end game for the company is to do an IPO, but you always have to come back to the core question, why do you want to do an IPO? What is the primary reason?

Gautier: How early do you have to get an answer to this question before actually pulling the trigger and say, “Okay, we agree we want to do IPO, let’s work on that,” right? What would be the typical timeline for family-owned companies, or in general? Maybe there’s some differences with family-owned companies as well, right?

Annika: No, but I think with a family-owned company, this is one of the first things that you discuss. What is the reason? That is also the key basis for the equity story to tell the market why they are pursuing a public market route. I think with the private equity companies, it is not a question you have to ask, because that’s of course implicit in the whole model of the private equity ownership that the exit is the end game for their ownership journey in the company.

Gautier: Over the years, did you see an increasing competition again from other alternative or private alternative to those companies or for those shareholders? I mentioned the private equity landscape has changed a lot over the years. It’s in more and more fan setting up some bigger fans. I will assume that this has increasingly been a very good alternative for those companies while a couple of years ago, maybe the IPO was the only route. I guess convincing those companies to be public has been just more competitive versus alternative, right?

Annika: Of course, this is totally linked to what advice you give where you are in the cycle. Going to a company right now and saying, “We would pursue a public market listing in, for example, Q2.” I think that’s a challenging message to deliver to the client because it has low probability and thereby low credibility. I think that really goes with looking at where we are in the capital market cycle. I would say that most of the clients, we are always considering alternative routes. Sometimes, an IPO is actually a dual-track process that ends up in the public market. Sometimes when you see an M&A transaction, it could have been a parallel track with an IPO.

That is not described or visible to the market, what the process is ending up to the final transaction. I would say many of the transactions are either full-blown dual track, side by side, or sequential that you maybe start with an M&A. You’re not sufficient without the valuation indications or any other aspects of that process. Thereby you tap over to the public market of visa versa. Of course, we are exploring different alternatives, which is initial public offering, a trade sale or a secondary sale, or if you want to sell to private equity.

Gautier: Your job and the value of you getting involved in this IPO process obviously will be to have the company being IPO ready. Looking at such IPO candidate, what would be the most important work stream that you think the company will have to address and work hard to get to this point of being IPO already? Again, keeping in mind that the company would be owned by a family, it’d been private for years. As opposed to, again, some private equity-owned companies where maybe the sponsors have been already helping them ahead of the IPO timing to be ready and to be more, let’s say institutionalized.

I would guess some other family-owned companies would not be to that point of already investor ready. I guess the workstream would be different as well.

Annika: That’s absolutely correct. I think private equity owners, they do prepare the companies for final exit, whatever that is already when acquiring the company. A private company or a family-owned company have not done any of these preparations normally when they start the IPO process. The IPO readiness process overall is the biggest task for a family-owned company going into this process. It is everything with complying with all the listing requirements, the policies, the documentation of internal reporting and compliance, and the overall due diligence is extremely time-consuming for the company to prepare in such a short time. That is a very, very big part of the project.

I think the second biggest challenge for a family-owned company is to understand and get used to communicating with a totally new stakeholder base, i.e. the analysts at the investors in the capital markets. When you are, for example, in a family-owned company, most often you have a very strong culture, you have an enthusiasm and you talk to your employees to maybe your suppliers and your customers and explain the company in a very different manner that when you have to explain the company for the stakeholders in the capital market.

That process of understanding why you have to communicate in a different manner and that maybe losing a bit of that cultural aspect of your communication is a big change for the management team when they approach the first stages or getting in contact with the capital markets participants.

Gautier: This communication I guess is being public, obviously have much more communication requirements. Also when you think about how you talk to the markets, how you guide the market, even financial guidance which public companies have to guide the market to some extent. It seems to me that there’s different level of details if company will be family-owned or actually a financial sponsor or I don’t know. Is that something you also noticed and you’re well aware of?

Annika: I don’t think I totally agree on that. What I tend to think and feel is that the family-owned companies are more afraid of the scrutinization that they are approaching, that they don’t want to underdeliver, that they don’t want to fail in their communication or overpromise and not deliver on that. I think they are more prudent in general of actually saying what they think they are able to deliver and maybe that the market view that as less communication. I wouldn’t say that, they are very honest and very clear normally, but maybe they are more cautious and conscious about that they want to deliver on exactly what they are saying because that’s in a way what they are used to when they are communicating.

Then, of course, I mean the whole process of the IPO is that they have to put down a very detailed business model. That business model works the basis of the board’s decision of the financial targets. It is a kind of a very long process of finally setting the financial targets. I think that work is extremely important in an IPO because if you have done that very firmly, most likely, you will also deliver on your financial targets. If you have rushed that process, maybe then in the short term it’s going to be more deviation to what you have said to the market than if you have a very detailed business model that forms the platform for the financial targets.

Gautier: Makes sense. Once you’ve worked with your clients on those very important questions, on the equity story, on the financial model, on the IPO rational, when is then the timing right to actually go out in the markets? I guess there’s some internal factors, external factors as well but how are you thinking about giving this advice to the board and what would be the key considerations?

Annika: That’s absolutely correct. You have these external factors. Of course, they are out of your control but these are monitored very closely by the advisor during the whole process to see that there is a window when it’s a good time to try to approach the market. The internal factors are that you have to be ready, you have to be compliant, you have to had gone through all the processes, the due diligence work streams that are required to actually launch transaction. Then also, what is very important is that you want to come off in the public market on a fairly good trading i.e. how the company is performing.

It’s very important that you don’t lose your eye on the ball during this process because the management team is very tied up executing on the IPO process. That I think the biggest risk is that the performance of the company during this time may not have the same focus because they’re so occupied with the IPO process. It’s very important that you feel that you have a good trading going into the market and also that you foresee that the company quarters are trending in the same direction. I think the decision to launch is of course of the external factors at that point in time but also that we feel that everything internally is in order.

Also that we feel that we can deliver given what we know today in a good trading going forward in the near term perspective. That you would normally then go out with an ITF, the intention to float. That is not the must if you don’t have listed securities but most companies do that today. Then you start pre-marketing and that is what the research analysts in the syndicate go out and market the story to the capital market investors.

Gautier: Obviously you will be meeting a few investors ahead of this ITF to test to bit the appetite because again, you’re taking a risk of things you don’t control is, how will be the market when you go live. I guess you would like to get some visibility of the investor’s interest. How early you will engage with investors and how can you actually minimize this exposure to the market when you go live? Do you have some technical tools in your toolbox to actually make sure the IPO process is not derailed by the market?

Annika: That is absolutely correct. There are sequential interactions with investors ahead of going out publicly with your transaction in order to get feedback on the equity story but also indications, very rough on valuation. Also that there is interest in the capital market or among investors to actually invest in the company even though there may not be firm commitments. Of course, we start doing this when we have the equity story framework up and running at the first interaction we call the early look, which is basically an introduction to the company to a very limited group of investor often locally and internationally to get feedback on the equity story and to see whether there is an overall interest of the company.

Then as we go along and have more detail on financials and financial targets, we have more interactions with investors before we capture to the intention to float. I think it’s really important that the transaction is well acted either by cornerstone indication, which is firm commitments or by soft commitments in an active process before you launch. That is of course minimizing the transaction risk as much as possible but also to feel that we have a good investor base that have interest for the company and most likely will be the shareholders of the company whilst listed. Also that there is a good mix of investors both locally and internationally but also [unintelligible 00:19:53] and hedge funds.

You can feel that there is a good foundation of a potential shareholder base before you press about it.

Gautier: When you look back at all the investor feedback again of some of those IPOs which happened in those premium companies coming to the market, when it comes to the governance model, because most likely some of those companies, you would have, obviously a strong shareholder family and potentially some of those family members will also be part of the management and senior executive, when you look at the investor feedback again during those IPO process, any recurring points when it comes to the governance model, and how to best align the interests of those new investors with the current family shareholders?

Annika: Yes, but first, I would say investors, in general, like to see that the family is still highly engaged with the company and it can be both in the management team, but also on the board that they still are, with their knowledge, experience, and everything that they have learned during the journey to take the company to the point where it is now, it’s very important. I would say the most important thing is how you communicate about the family’s long-term intentions as a shareholder.

Because the market does not like surprises and if suddenly the family would say that now we are going to sell X% of the company, if that has not been expected by the market, I would say that would have been very disappointing news for the market. What we tend to guide on or advice the families is that be very clear on how you see yourself in the short-term and the long-term as owners of the company.

Because the investors want to know, is this the only liquidity event in the foreseeable future, i.e. they are not going to sell any more shares? Or is this the first step, for example of a two-step process, where they first lease the company, sell a part of the shares, and then maybe settle down to let’s say, 50%, 55% keeping the control, but decreasing free float? I think it’s also very important for investors to understand whether the family has the intention to continue to be in control of the company, because that is, of course, very important, given this strategy that is presented at the IPO.

Gautier: I think it’s a very positive signal, obviously, if the family stay. At least as a transition phase, because obviously showing support and align interest on the case, but eventually, you might have some investors saying, “Listen, I like a lot your business, but if you keep owning 60%, free float is limited.” It’s more difficult to build a bigger position, obviously. It can also be a bit of a negative over time, if this free float is not increasing. You have probably to find balance between what you give to the market and what the family keeps over time, right?

Annika: Absolutely. That, of course, depends on the size of the company, if it is a very large company, because we look at also free float and absolute tab. We want to make sure that the share is going to trade with sufficient liquidity, but that of course, it depends on the size of the company, and then the size of the free float in percentage and the absolute tabs.

Gautier: That makes sense. When it comes to the role of the family in the company, so not as a shareholder but as management, I guess the question, based like any founder-led companies, the founder is going to ask himself, “Do I want to stay CEO and lead the company, the new chapter as a public company? Or should I actually quit or change role because CEO of a public company is not necessarily the same role and skills required in a CEO of a private company?” I would think so. Is that a question that again, you’d need to address very early in the IPO preparation and do you see a lot of these management changes before an IPO or not really?

Annika: My experience from the transactions that I have done is that I don’t see very often changes on the management level in the companies. It could be that the IPO with, for example, one of the founders or the family member as a CEO and then over time, there is a succession to maybe a non-family person taking over as a CEO, but at IPO, I would say I don’t see that it has been that many changes.

However, on the board level, that’s where we see the most changes go into an IPO process, because most likely, the whole family sits on the board or all the members of the family, and in order to comply with the listing requirements and the regulatory requirements, you need to have another type of composition of the board go into the public market. This varies a bit between jurisdictions, but in all jurisdictions, it is that you need to have independency on the board. That is what we often see is that you bring in independent board members in order to comply with the requirements.

Gautier: Another question I always ask myself as well is how well the management, if it’s not again, family members, but is actually incentivized to work for the best IPO outcome possible for its shareholders, also the family members? In the private equity model, we all know it’s very well-set and there’s a very strong incentive structure for management to allow the best exit for this financial sponsor of an IPO so after IPO over time, for private family-owned companies certainly must be different, right? What’s your experience with respect to management incentives around the IPO, after the IPO when again, the company is owned by a family?

Annika: Yes, very good question. The family, if they are on the management team, they are, of course, incentivized by the often holding quite a large stake in the company on an individual basis. The rest of the management sometimes have no incentives in place and then the question arises that are you to put in place and it’s up the program ahead of the IPO or are you going to IPO the company and then let the new shareholders coming in, participate on the general meeting and vote through the incentive program?

We can see both of these two happening. I think the parameters to keep in mind if you do it ahead of the IPO is, of course, to look at the cost of the program that is then going to be the cost occurred in the company post IPO, and then the dilution, so how many percent would that dilute if it is incentive program with the stock included? What we do is that if we have an incentive program putting in place ahead of IPO, you have to be very careful with these two parameters not becoming an issue at IPO or post-IPO.

Gautier: This notion of IPO bonus, we see that sometimes. Obviously, as you said, the IPO process can be very intense, requires a lot of internal resources and I heard someone telling me that a successful IPO is when you don’t lose any employees during the IPO process. Do you think setting up an IPO bonus is the right thing to do to incentivize management during this long process? Or you would rather advise them to actually, look at after the IPO, allowing shares and creating new long-term incentive schemes, but not necessarily at the point of the IPO?

Annika: Very good question. The most important thing with all these questions of incentivizing management team, is transparency. Investors see exactly what the costs are, and who’s going to carry the cost for these bonuses or incentive programs. If you ask me personally, I would not recommend to have IPO bonuses, because I think it creates a discussion point in the meetings that is unnecessary.

We often see in the media when we do IPOs that the journalists like to really put the tension to what a wealth will be with certain individuals in the company post IPO given their shareholding pre-IPO or post-IPO. I would say to take away as many things as possible, that create unnecessary disturbance to the process, I think is good, but if you want to have that schemes in place, it’s just to be very transparent with everything that you do and who’s going to carry the cost for these types of programs.

Gautier: Obviously, transparency is important and you mentioned public scrutiny as well. Just going back maybe to this cultural challenge or changes from private to public, what usually see as the biggest chance to overcome for those private companies when it comes to interacting with the public markets, and facing this public scrutiny? Where do you see them having the most difficult to make internal changes and complying with the rest of the market?

Annika: I think the biggest challenge is to accept that they are being scrutinized by the market on a quarterly basis. Most likely, before the IPO, they didn’t see every company or evaluate on a quarterly basis their actions and the result of their actions. I think that is the biggest change and the biggest challenge is to understand that they are now being analyzed and scrutinized on a quarterly basis, which is for many companies a very short timeframe.

Gautier: Do you feel that those companies over time managed to build the right relationship with the new investors? We all know your shareholder base can change quite a lot and can be quite fragmented or not by the West and markets will have much more concentrated shareholder by nature of the institutional base locally and I think the Nordics at least have the luxury to have really strong local owners as well, but do you feel that the management over time has a good understanding of the new investors, and that this new relationship is strong and stronger over time, or that’s always a bit of a surprise to them how fragmented and how little they know their shareholders?

Annika: I think this is very important. I think very often the advisors do the IPO and that the project is over and the company is being left out on their own on the public market journey, but it’s very important to remember that the IPO is just the beginning for the company on the public market journey. We once had a company that we IPO’d that was going to release the first quarter results.

The results were good, but in the CEO word in the quarter result, it was a sentence that was interpreted in the wrong way by the market, which created a very bad situation that was not intentional and it was basically incorrect in a way because the phrasing of that word was not the way that the company thought that the market was going to interpret what it was said. That is an example of that I think it’s very important that the advisors stay on board and help the company in the first quarters when they are to report the results with exactly the wording, the phrasing, and what the analysts and the investors are focusing on and why they’re asking certain questions.

For example one of the companies that I worked with in IPO, we actually helped them for many, many years. It was the management team that wanted our discussion and they felt very good about going out with the results because they had discussed it through with us first, not because they changed anything, but just to understand what the market was focusing on, and they could explain the positives that potentially the negatives result in a good way or in a way that was understood better by the market.

I think that my advice to advisors is actually to stay on for a while and help the company with a fast quarter result because it’s important that you get off in a good way with the market. Then over time, of course, you get very used to these conversations and you are well prepared to do it on your own. I think in the fast court result, it’s very good to have some proper guidance and help.

Gautier: I’ve heard that a lot and I think advisors should play an important role here because then the management would come back to you and complain, how come the market doesn’t like our numbers? We just beat them. I’ve seen many cases where management was very frustrated because very strong earnings, numbers, even guidance, and the market reacting negatively. I think it’s back to the semantic, also back to what you actually communicated during your marketing. Basing this example where once you told me that the first mistake they did in their first quarterly call was actually to take question of the sell side analyst, not in any order.

They just let the most bearish analyst asking their first question, which apparently set the tone negatively during the earnings call and the shares were during the earnings call. He told me next time we just let the most bullish analyst asking their first question.

Annika: Yes. I also think a good way to build credibility and the confidence with the market is also when you present your results that you say these aspects are in line with our expectations, but this did not end up in line with our expectations. Why and what have we done to solve it, or, what initiatives have we put in place to avoid this happening again or something.

To be very transparent because often you see that the management things come out and all the talk about the good news, but it’s as important to highlight things that according to your own measures have not ended up, in the area that it wanted what you have done to solve it or to change it. I think we also encourage the management teams to be very objective while they are percepting their results.

Gautier: What do you tell them about hiring an investor relation again, based on our experience, sometime the IR is onboarded before, during the IPO process. Sometimes it’s after which I always feel it’s a bit too late because effectively, it’s much better to have an IR being there when you pitch and you tell your equity story and start knowing the investors who will be on your shelter base day one.

That helps a lot as well, the aftermarket liquidity and good coverage because too often we see those new companies coming to the market and probably not thinking that it’s important to talk early to the market and that will effectively impact negatively the liquidity and so forth and can create a negative vicious cycle, unfortunately. Do you have a bit of a view on when is the right timing to hire IR?

Annika: Yes, according to the rules, you need to have someone appointed as an IR, but could also be the CFO, for example. In a smaller company. I think you are absolutely right. I think it’s good if you have a person taking on the IR role that that person is being hired and coming to the company during the IPO processes and then learn the company, the history and work together with the management team.

At IPO, it’s very much the CEO and the CFO and potentially another person of the management team that are the key persons in marketing the story and meeting investors and maybe during the first quarter, second quarter, et cetera.

Once the investors on the market get to know the company very well, it’s good if you can lift some of these investor directions to the IR because that also leaves more time for the CEO and CFO to do other things, of course, rather than going on roadshow after every quarterly results for a couple of days seeing investors, which is very time-consuming. I think it’s very good that you have an IR that knows the business very well and can take quite many of these investor interactions. In order to know the company very well, the best way to get to know the company is to be part of the IPO process.

Gautier: How long will you stay as an advisor after the IPO? Typically when will your job basically stop or the client not expecting you to get involved anymore?

Annika: As the backer, when you have concluded the transaction, basically that project is over, but if it is a private equity, of course, there could be more shares to be sold in secondary sell downs over time. Of course, you stay in very close contact with both the company and the owners.

I would say as an advisor when I work, we tend to work very closely with the companies post IPO, as I explained to you both ahead of the results, helping them with communication if they wanted, but also advising them on several topics that arises during the time as a listed company. A product is such, of course, is over, but I would say that a good advisor I would think stays off at the– keep a very close contact with the company.

It’s also important to say that for every company, there’s going to be an occasion where you have to communicate some bad news. I think if you don’t have advisors that are constantly updated, your progress of the story about the company could also be very helpful in such a situation when you have to communicate a problem or less good news to the market. Because that is a situation when everybody needs help, I would say.

Gautier: Most likely, that would be the same advisor of the company thinking about an M&A or issue equity now that they have a currency. We see a lot of those family companies actually using the IPOs as again, an accelerator for the next growth phase, or as you said, providing more liquidity as well. I would guess this relationship you establish at IPO is just actually going to stay and there would be more occasions to actually build on it and other opportunities to advise a company.

Annika: Yes, that’s totally correct.

Gautier: If you look at all those advisory roles during an IPO process, again, we know there’s advisors for everything. On the legal side, obviously on the accounting, financial side, communication side, where do you feel maybe there’s still need or the most value add advisory to give either to management or to the owners in the IPO process? Do you think today, it’s well covered and it’s a really, let’s say, mature industry or do you still see that these areas where things can be done better obviously or better advise your clients?

Annika: Since I’m today working as an independent advisor to owners and management teams and boards in the IPO situations, primarily I would say that that role is not used in every transaction.

If I look at the transactions where I’m advising, and of course it could sound like I’m promoting my own role, but I would say that the benefit of that is that I can prepare the clients, I can explain to the clients of the different work streams of the questions, but also that the meetings will be more efficient, well understood, and I can guide them through the process in a very objective way because I often think and feel that the client, of course, will at some point in time feel that, the advisors may say things that maybe not the company’s best interest and just to explain and sort out the differences in advice and how they should think and look upon things, I think makes the process a bit more clear.

I think preparing them, explaining and guiding them through the process, I think that is a big benefit for the companies going into an IPO process because the majority of the companies have management teams that has never done an IPO before. They could be CFOs, for example, that have been part of IPOs in their previous occupations, but most of the people that work in an IPO product from the company side have never been through this process.

It’s a lot of words, terminology, and a lot of advisors and it’s just very difficult to understand exactly why everybody’s there, what does everybody do, and why do we do this and why are they asking for this, and so on. I think having that person explaining during the process, I would think it’s a big help for them.

Gautier: Yes. I can confirm and we see it and we actually feel it as well when the management is better advised as well because as you say, it’s always a first time for them, most likely. Although sometimes when it’s finished, private equity owned companies, the senior executive might have done some other exits and then much more prepared as well to talk to the market and you can feel it. Sometimes family-owned management companies, again, feel a bit less prepared from that respect. We know they have a business to run in parallel as well and a lot of pressure to execute the IPO for their shareholders.

I think it’s very important for those management companies to have the best advice because I will also work in the interest of their shareholders.

Annika: Yes. I would tend to agree.

Gautier: Any fun facts as we’re coming to an end now that you would like to share with us about some, war memories, fun fact during IPO, or shows that you remember and would be of interest to our listeners?

Annika: Yes, there is always something happening during an IPO process. It can be one or several challenges that you have to get through. One of the companies where we were to do an IPO, the CEO used to go cycling in the morning and we had a full day of investor meetings. On my way to the office, he called me and he said, I’m sitting here in the office and I fell on my bike and I have broken my collar bone.

How to overcome such a situation in the middle of the marketing processes, is, of course, a challenge, but we succeeded with pain relief and a lot of love and care during this process. In order for him to be able to execute all these meetings with a very high level of pain, but that is also doable. You should just think when you go into a process that everything can happen and something will happen and it’s always something that happens. It can be a small issue or several issues or a large issue, but that’s always the case.

Gautier: Yes, I guess that was pre-COVID or Zoom right now. These days, those issues, you can actually manage them pretty well, doing most of the meetings virtually, right?

Annika: Yes. That was during the time when we were traveling around to see investors, all investors.

Gautier: If you look at all the family-owned companies, great companies, are there still private? Anyone you’ll think should become big or would love to advise?

Annika: I would say there is one company that I think the entire advising community, and I would guess also the entire capital market would love to see coming public. That’s of course IKEA, the Swedish furniture company that’s been discussed there on the wishlist fighting for all the bankers for decades.

Otherwise in the Nordics, there are a few very interesting family-owned cases that I think would suit very well being listed in the capital markets that have extremely good equity stories for a very good basis for letting capital markets coming in, taking part of the future profit sharing in these companies that would compliment the current list of companies listed in the Nordics very well and some of them also of size.

Gautier: I don’t know why, but I was sure you will mention IKEA obviously. I don’t know that would be an easy pitch or a difficult pitch, but definitely, I’m sure that they tap the equity market they’ll have a lot of support globally. Let’s see if that ever happens.

Annika: I think the strong brand of that company is of course very interesting in that as in every company, in every case, and every IPO, you have to consider the current market circumstances for that specific IPO, but I think it is one of the world’s strongest brands and I think that is what of course creates the interest of having it as a public company.

Gautier: Hopefully, they will choose Stockholm as a listing location, right?

Annika: Yes, well never know. [laughs][music]

Gautier: Okay. Annika, thank you very much for your time. I appreciate you sharing your experience with us, telling more about family-owned companies and the IPO process. Was really helpful. Thanks again.

Annika: Thank you.[music] Thank you for listening to IPO Stories. In future episodes, we’ll host advisors, CEOs, CFOs, and other participants in the IPO process to learn from their experiences like Annika today. If you’d like the show, please follow us on Spotify or Apple Podcasts and share the show with people around you. If you have questions about the IPO process that you would like us to address with future guests, please get in touch at