How to navigate your company to IPO with Michael Jacobs & Dylan Doran Kennett of Herbert Smith Freehills

Understanding capital markets and listing reforms is essential for businesses aiming for growth. In this episode, Michael Jacobs, Partner at Herbert Smith Freehills, and Dylan Doran Kennett, Venture and Growth Capital specialist, and partner at the same company, share their expertise on IPOs, M&A transactions and the impact of UK listing reforms. They discuss the contradictions between fast growth and compliance and the benefits of upholding and creating a unified work culture during IPOs and mergers.
Key Takeaways:
(03:00) The impact of UK reforms on capital markets. 
(05:22) Reforms have eliminated eligibility requirements for IPOs.
(08:43) UK pension funds have massively de-equitised.
(14:01) Dual-class share structures and their benefits for founders. 
(15:00) Examples of financial systems designed to channel money.
(21:06) The role of dual-track IPOs in giving companies flexibility. 
(28:15) M&A as a growth strategy for IPO candidates. 
(35:30) Balancing aggressive growth and structural compliance in IPO preparation. 
(45:39) The challenges of IPO due diligence and preparation. 
(53:22) Understanding the difference between listing in London and the US.

Resources Mentioned: 
Michael Jacobs -
https://www.linkedin.com/in/michael-a-jacobs/
Herbert Smith Freehills -
https://www.linkedin.com/company/herbert-smith-freehills/
New Financial -
https://www.newfinancial.org/
UK’s IPO Reforms -
https://www.fca.org.uk/news/press-releases/fca-overhauls-listing-rules-boost-growth-and-innovation-uk-stock-markets
FTSE 100 -
https://www.londonstockexchange.com/indices/ftse-100

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You know, it's it's often survive or die.And I think the ones that did take arealistic approach to valuation,understanding that, you know, therewere some pretty there's a prettyaggressive bull run for a while there,They're pretty well placed now to tolook at a capital markets exit.

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My guests today are two people whobring a wealth of experience in thefields of IPO, venture capital, andcross border m and a.

Michael Jacobs has over fifteen yearsof experience across IPOs, as well asadvising on public and private m anda transactions.

Michael joined Herbert Smith Freehillsin twenty twenty and is now acorporate partner specializing inequity capital markets, growth capital,and m and a transactions.

Michael is a ranked lawyer inChambers and Partners UK and theLegal five hundred. He's also qualifiedand practiced as a lawyer in HongKong.

Dylan, Doran, Kenneth more recentlyjoined Herbert Smith Freehills to colead its venture and growth capitalpractice. Dylan has a wealth ofexperience in venture and growthequity transactions, as well as privateequity, domestic and cross border Mand A. He predominantly covers thetechnology, life sciences, media, andsports sectors. Dylan is also ranked,Dylan is also a ranked lawyer in theLegal five hundred and was named acorporate rising star at the twentytwenty three LMG Life SciencesAwards. Welcome to both of you.

I'm really excited to talk to you bothtoday on the Global Workforcepodcast.

Likewise. Thanks, George, very much,looking forward to this. Thanks forhaving us.

Damn. Thanks very much. Lookingforward to it.

Awesome. So let's dive right intosome some detail. I wanna talk a bitabout the UK reforms, and how theymight be able to help, UK companiesto unlock capital in a more efficientway.

We're kind of sitting here recordingthis in the aftermath of of some ofthese reforms in the UK that cameinto place came into effect the end ofJuly, a couple of months ago. They'vebeen designed to make it easier forcompanies to access capitals.

They've been designed to make iteasier for companies to accesscapital.

Some of the examples are the newlisting rules, and the Pisces reforms.Michael, I know you've been verypositive about these and have got,kind of quite a positive perspective onthem. I'm keen to get your take onhow you think, these might help toshape the IPO landscape in the UK.

Yeah. I mean, I think it's got noexaggeration to say that this sort ofseries of forms are, yeah, the thebiggest wholesale change in the UKlisting environment for a generation.

They are, you know, hugely significantfor us to operate in the UK capitalmarket space, so we're obviously veryexcited about, and it has changed thetone of the debate, on, you know,IPOs in London quite materially.

What I would say when you sort oflook back, I mean, really, the sort ofgenesis of this, sort of one of the Iguess, one of the few, advanced useof Brexit in some ways becausepreviously, we were sort of tied to theEU sort of minimum directives onspecks and that kind of thing. And sothe whole one of those sort of flowsof Brexit was they did begin with theLord Hill review and the Austin reviewand a bunch of other, pieces ofgovernment commissioned researchand recommendations to to sort oftake a wholesale look at the capitalmarket system in the UK becausethen there was a broad recognitionthat it really wasn't working as well asit could.

And that was a function of, you know,declining number of listed companiesin London, as hard as YPO, perceivedattractiveness of other venues beinghigher, that kind of thing. So, youknow, there was a sense of, that thesort of standards in the UK wereperhaps too high was creating thiskind of walled garden effect whereyou have lots of, if you look at thecomposition of the Footsie onehundred, quite a long tail of, youknow, perhaps old economy,companies rather than the sort ofnew growth tech companies that youmight want to sort of replenish your,industry constituents. So, yeah, thatwas a and one of the reasons for that,obviously, is the attractiveness of theUS as a listing venue. But, yeah, oneof the other main reasons was thatthe eligibility requirements in Londonwere quite high. You know, you had tohave a three year track record thatwas, you know, just profitable trackrecord that was quite hard forcompanies to meet particularly postCOVID.

And so there was a wholesale look atthe regime, and, you know, they'vedone some very significant reforms.Basically, you know, they wanna sortof level the playing field betweenLondon and New York. So, forexample, you don't need to issuetwenty five percent of your sharecapital on on IPO. That's now gonedown to ten percent, which is morethan equivalent to, you know, where itis in New York that the test is slightlydifferent.

But, you know, the importance of thatis is actually from pricing tensionperspective, you want to price yourIPO successfully.

If you've gotta sell twenty five percentof your market cap in one go on IPO,that's quite a lot of lines you need inthe book in terms of investors.

And so you create some quite, youknow, potentially distorted bookbuilding exercise, which means theprice might not be as low as as far ashigh as you hoped, which means youmight not get a pop when IPOs, whichmeans the aftermarket performancemight not be as good, which meansinvestors can't necessarily break theirlockup and sell down early, that kindof thing. So every all of these thingshave sort of unintendedconsequences, particularly when youcompare it with with New York, whohave got the system right, I wouldsay, generally. And so what they'vedone is they've removed all theeligibility requirements, essentially.

So you can be a member of the FTSEone hundred without a three yeartheory, without a three year trackrecord, without profitabilityrequirements, without control of yourassets, without a clean workingcapital statement, all that kind ofthing. And then they've also scaledback the, continuing obligations quitesignificantly that were realimpediments for UK listed companiescompeting in m and a transactions.So for example, if a UK companywanted to buy significant assetsoverseas or, you know, buy a big UScompany, for example, to grow itsinternational footprint, if that size ofacquisition tripped some test, whichflipped it into what's what's called aclass one acquisition, they'd have togo to shareholders to approve that.

And so you would need to basicallyget shareholder consent in order toexecute that transaction, whichmeant you had to have conditionalityin your sale and purchase agreement,which meant UK listed companieswere perceived to be not very nimbleas compared with private equity.There was, like, almost like a premiumput on that risk in terms of the m anda processes.

So it was very awkward forcompanies in that space to dosignificant transactions, and so thatwas an impediment to thedevelopment of some UK PLC in thatsense. And so they scaled back a lotof those eligibility requirements wellto make the kind of listingenvironment much more benign andattractive. And there's a whole, youknow, universe of other things thatthey're looking at in terms ofexecutive compensation, reporting,governance, stewardship. There's awhole range of things, but the the bigbang of listing reforms, which tookplace in July to create this newsegment, which is eligible for theFTSE, is, as I said, a hugeachievement with the regulators tosort of their cap to them and and, youknow, been, you know, like us, beenvery involved in promoting thesereforms.

And, you know, we think it will resultin, you know, a a market that is notderegulated that stores the right levelof control, but it's just proportionateand will help encourage companies tolist, list in the future.

And it's also as I said, you know, asyou might be aware, it's part of muchbroader reform agenda that that wasannounced in Manchin's House. So ifyou think about the reforms I've justtalked about there, these are theinstitutional architecture, theframework, the listing regime that hasthat has been re recalibrated to makeit more competitive. And then thatmeans companies can list and privateequity who has portfolio companieswho might want who might bethinking of IPO and have moreconfidence in the regime, and we cantalk about how that how privateequity might think about this. But thisis just one part of it.

I said, munition is another part of it,but also there's the buy side as well.So there's a big concern that UKpension funds have massivelydeequetized, it's called, in terms oftheir so they used to make upbetween forty to sixty percent of theUK stock market, and now make upthree percent. In fact, they make upfamously less than the GDP weightingif you were to have a globaldiversified investment plan.

The UK pension funds areunderweight versus UK GDP versusother countries if you have a I mean,it's just absolute insanity. I mean, thatis like national suicide pension. That iscompletely divorced from othermarkets. And there's one someresearch published by, I think,technical new financial last week,which demonstrated that, you know,there's a lot more home bias, in othermarkets and the pension side ofthings. And that affects your buy side.You know? Because you think aboutwhy why are UK shareholders sowilling to sell in a public m and atransaction in a sort of listedcompany.

Sixty to seventy percent of yourshareholder registered will be non UK.Right? And we'll be thinking abouttheir financial returns as allshareholders do. But, you know, ifyou've got a domestic investor base,they will perhaps think about thenational interest and other things likethat in terms of creating as they do inother parts of Europe.

So I think there's a national securityside of this as well, a nationalresilience side of things as well as inengineering markets on the investorside, and that this involvesmarshalling pension and insurancemoney, and there's a a lot of talk. Youknow, there's various conferences,almost talking at the moment aboutgetting those back into equities, bothprivate with the alternatives andpublic markets because the corerationale for that is returns forinvestors need to be improvedbecause there's a massivedemographic crisis that's gonna hit alot of the Western countries. And ifyou don't grapple with that andachieve better returns like theCanadian pension funds, Australianpension funds, all have much betterreturns than UK equivalents, and thataffects people's retirement outcomes,which is absolutely critical.

And also this investment providescapital for all companies, to grow andemploy people and the newgeneration of technologies that wewould like to see based in the UK. It'slike a big UK aspect to this as well.So, you know, the reform is is aslisting reforms are a key part of thatbecause you need a kind of, clearpath to an IPO is which public marketinvestors can invest in. And soanything that is an impediment to thatis a real real problem and challenge.

Yeah. Makes total sense. There'sthere's loads of points you you madethere.

I think Yes.

That that was a very, you know, chipwe wanted to have a very, like,whistle stop tour of a very big issue ofwhich there's lots and lots of reportsand government studies on and allthat.

And And we're passionate about.

So yes.

Yeah. We're very passionate about it.Exactly.

Well But I I think, firstly, it's great toit's great to be able to point tosomething and say, actually, part ofthis is this this is partially locked byby Brexit.

That's good to have at least onebenefit of, of leaving the the theEuropean Union there, which is good.I think the point you make about, onlyhaving only only kind of having thatminimum threshold dropping fromtwenty five percent to ten percentand and allowing companies to kindof dip their toe in the water a little bitand rather than rather than Yeah.

I mean, there there's there's anotherthere's another one, which is which isbeing consultable at the moment,which is if you're if you're you arelisted and you want to raise newequity capital, which, you know, tofund your strategy to do an m and atransaction, then they're proposingthat you won't need to publish aprospectus if you're issuing up toseventy five percent of your sharecount. And that is a huge rights issue,potentially, a huge capital raisepotentially involving a fundamentalchange of your business.

But the, you know, removing theprospectus requirement is, you know,not with that controversy, but if theydo, then you would streamline thesecondary capital raising process to amatter of weeks rather than months.So if you were a listed company whowants to go and buy this UScompany, not only and use paper asyour, you know, shares as yourconsideration, not only do you notnow need a shareholder vote, but youwon't need to issue prospectus, toissue the shares or, raise the moneyto do that. So it's potentially up toseventy five percent. So that wouldbe, again, a bit of a game changing,and hugely beneficial in one way, butit's obviously, as I said, it's not riskfree because ultimately, all of thesethings, if you remove eligibilityrequirements, if you make iteverything based on fundamentallyaround disclosure, what are yousaying?

You have to make sure thatdisclosure's right. You have to makesure that you're thinking about theright things and and highlightingthem. And, obviously, not everyonehas a crystal ball, and so things willinevitably go wrong.

And we don't want, which is whathappened, which is why we ended uphaving this massive gold platedregime in the past, was because ofpeople like Maxwell and othersituations, which have resulted in, anoverregulated market to to sort ofremove any downside risk. And we'regoing back into an era where there ismore risk and risk of a good thing in acapitalist society, but obviouslyrequires, people to take theirresponsibility seriously and make surethey are disclosing, what they need todisclose. But as a kind of realignment,it's really great. As said, it's it'sanother fascinating, development thatconsultation actually closes a coupleof weeks time. Debating our responseon that with with others. But, again,that's that's a very excitingdevelopment.

Yeah. Absolutely. Dylan, I know you'realso really positive about this. Curiousto get your take on this as well.

Yeah. Well, I think Mike did a prettygood job covering all the all thereforms. But, on my side, as we seecompanies go up towards IPO, youknow, we're pretty pretty bullishabout some of the changes as welltoo. I think the one that jumps outfrom my point of view is the the dualclass share structures.

So this is something the US hasbenefited from for a long time,frankly, in that, founders obviouslywanna retain a numb control overtheir company as long as possible. It'stheir baby, frankly. And, the and anyany impediment towards that isgenerally seen as, unwise in afounder's mind. But, where the USused to stand is, or does stand is youcould have a dual class sharestructure whereby founders couldretain some type of outsized votingcontrol as opposed to the publicmarket who were receiving a differentclass of share to them.

That was something I think they had aleg up on us, and there was anasymmetry there in the in the UK.

That's obviously been introduced andvery, you know, excited to have thatchange over here because it givenwhat the UK has been doing andproducing some really domesticamazing champions over the last fewyears now and a lot of them comingup to IPO. I think that's gonna bequite, attractive. Although we did seesome, you know, issues with, youknow, some large companies that,tech companies that came through onthe first IPO wave, and and did take ahit on share price because, you know,UK investors maybe weren't ascomfortable with that structure orfound it as a a negative. I think in duecourse, it will just be seen seen as thethe common way forward for founderbacked companies.

And we hear about things aroundsunset clauses that that might just befor a period of time. Those dual classshares exist.

But for me, I think that, you know, oneof the discussions we're alwayshaving with a late stage companythat's looking at exit opportunities,especially when the markets areawash with private capital to stay,private much longer, is what are thegeneral benefits of going public,especially if you're ceding that muchcontrol. Now now that we can say,okay. There is an element of retainingcontrol of the company goingforward, that's just another tick in thethe capital markets box. So, yeah,very, very bullish on that side ofthings. And as Mike touched on ingeneral, you know, adjacently, themansion has reformed very pleasedto see that as a Canadian bybackground. I think I've seen andbenefited from what, you know, manyof the Canadian pension funds havedone over the years.

Same with the Aussie supers.

They've just had an allocation alwaystowards, you know, the high growthprivate companies, and there's noreason that shouldn't be done here.

So I think we're a bit behind thecurve, but I was I was, happy to seethat the government was at leastgoing over to Canada, to chat withthe pension funds, understand howthey've set up, historically and whattheir kind of modus operandi is. Somaybe we are you know, I Isometimes think that we're a bit,insulated in our thinking, but it's goodto see that this new government hashas jumped overseas to take, youknow, tip fix tips of the trade fromelsewhere. So yeah.

I mean, it is I mean, I think I think theCanadians are, you know, done itright.

And I think the one when I looked atthe UK regime and all acrosspensions, it and insurance is that, youknow, it we've inherited something byaccident.

You know, really, it's evolved over along time. I mean, the and things likeequitable light blow up and things likethat. I mean, there's all there's lots ofregulation of solvency too, whichcoming from Europe. So we've gotthis mishmash.

It's never been designed. The and thethe systems that have been designed,like the US, Canada, certain naughtyones, Australia, are incrediblysuccessful in channeling money. And,you know, we've got a huge job to doin consolidating pension funds. Youknow, there's talk about a nationalgrowth fund, labor and you get laborgovernment's announcement. Thequantum involved is a rounding erroron, like, the trillion pounds worth ofinvestment the country needs, andwe've got the second biggest pool ofsavings in the world outside the US.It's just all in debt and not in UKequities.

So, you know, there's we pivot thatwill be, like, amazing, and it's not Ithink it's gonna be a huge job for thegovernment to try and achieve that ina pension review they've announcedexplicitly on this week. So but if wecan learn some stuff from theCanadians and others, that would beamazing. I'll be very muchcheerleading that because it is youknow, it's the sort of existential point Imade earlier.

There's a big demographic challenge.

And then just Dylan, your point ondual class shares, I completely agree.I mean, they are like a kind of litmustest, I think, of how your market is it isit founder friendly, or is it, like,investor friendly? And I think having afounder friendly market is absolutelycritical because, empirically andthere's been some research on this bychatbot professor Bobby Reddy up inBobby Reddy up in Cambridge, andhe's looked at all the, empiricalresearch. They actually outperformcompanies without dual class sharesfor about ten years, something likethat.

And so, you know, for a sunsetclauses, have a sunset clause afterten years if you want, but actually,you know, they look at the evidence.Right? And that's because you've gota founder in charge of their strategy,IPO ing, perhaps earlier than theywould. Normally raising money off theEtsy markets means us three can allinvest in them and get the the upside.

And, you know, they can then executeon their strategy without fear of beingtaken over, you know, on day one ofbeing listed with a public takeover ofthat on a price that's that sort of ticksthe box of all these sort of purefinancial investors. So it's I thinkthey're, you know, are really good.And reality is we used to have them inthe UK. I think two thirds of the FTSEused to be composed of companieswith some form of dual class sharestructure at one point.

And we've just lost that because ofthe sort of bias towards one share,one vote, and all that kind of thingover the years and the sort of newpremium listing standard that wasintroduced twelve, twenty five yearsago, thirty years ago. So that's that'sthe you know, we're sort of turningback buck in some ways, which isgreat, but I you shouldn't we shouldn'tget away from the fact that, youknow, TrueCloud shares are, youknow, kind of they are controversialbecause they are a transparent,control. But, ultimately, if you discloseit and investors make their decision,why should you regulate to not havethem, you know, if people are willingto invest on the base so they investquite happily.

So lots of buy side complaining aboutthis kind of stuff in the UK.

The purists purists, but quite happy toinvest in Facebook, Meta, Google, youknow, News Corp who have theseshare rights embedded in there, andsome of them have to be unwound.

And there's been a, you know, coupleof things in the UK where investorshave pushed back, you know, the hubgroup, which had them in the UK,which had to be standard listed ratherthan premium listed because youweren't eligible for premium, whichmeans you couldn't get to the FTSE.So that was annoying. It used toannoy a lot of founders.

So it's yeah. Then they, you know, hadto unwind them because there'sthat's the pressure. But that's theinvestors' discussions withmanagement and and the founders.Right? That's how it should be, notnot ex anti regulation, which preventsit from happening in the first place,which is just, I think, you're talking in acapitalist society.

Yeah. I guess it comes into themindset of, you've as you mentionedearlier, Dylan, you've got a founderwith a late stage company looking fora potential liquidity event. Like, itmight if you have to cede control withone option, but you don't withanother option, it might start to makeyou think about the trade off. Yeah.

Especially, as I said, with that largepool of private capital that's sloshingaround Yeah. And looking for goodinvestments, why wouldn't you havesometimes? Yep.

It's part of equity. They're like theyput a portfolio company or eitherthere's VCs in, you know, you know,founder backed company. They don'tneed to IPO, really.

They can hold it forever. If theywanted to, they can do continuationvehicle. They can do there's a newthing called private IPO that peopleare doing.

You know, the so they don't actuallyneed to exit. They might even do adual track, you know, which is whereyou sell. You know, the wholebusiness will do an IPO. So, actually,they've got a lot of options, and soyou need to make the IPO telling, youknow, from a lots of, you know,valuation, liquidity, or there's all these,like, reasons, these and, you know,the way the market dynamics work aswell on these transactions as well asthe pool.

But it you know, they as Dylan says,it's all private for longer, and that is ahuge, you know, theme. Soparticularly with all the tape privatesthat have happened with the numberof listed companies goes down, yeah,we have to make the markets lookmore attractive.

And it's not like a zero sum game. It'snot like we all lose a private equitywin, you know, because people investin private equity, so, you know, havethe limited partners. So it's it's not likethat. So but it should be a continuumin that Mhmm.

If a company gets to twenty or thirtybillion, which is where, you know, theair gets a bit thin for private capital tobe able to continue to fund that kindof business. Yeah. If you look at themarket cap of Apple, it's like threetrillion. You know?

Private capital can't manage that kindof market capitalization at themoment.

Maybe one day. But at the moment,sort of thirty billion is where it gets abit hard. And so that is appropriate forthe public market to take that kind ofasset, but the issue has been in termsof the prep for these companies.

The the readiness for IPO has notbeen stellar in some situations, andthat's why productivity can have abad, sometimes, reputation of someinvestors, unfairly, I think, but it's justthe aftermath for some of theseassets has not necessarily beenstellar, and that has meant that someof these transactions have beenparticularly certain vintages, like thetwenty twenty one IPO vintage lookless well received.

Yeah. Hundred percent. And just to, Iguess, underscore some of the pointsyou're making there, Michael. If youlook at some of the valuations of, let'ssay, fintech companies right now, like,they're extraordinarily high, but, likeand they haven't listed yet, and youthink, well, they've got there's gottabe a draw for them to do it. Right?Otherwise, what's going on?

And there's a a mismatch. You know?There's you have to get people toagree. I mean, today, we like theywould sit through where the founders,a different idea of valuation to sellingto to the VCs.

Yep.

The public markets will have adifferent perspective because oftenthere's kind of like discounts, youknow, as a this can be a perceptionthat when a private equity are selling,why are they selling? And everyone'sa bit suspicious of that, and they thinkthey'll be selling us a lemon, youknow, which is yeah, probably unfairin, ninety nine percent of thesituations. But, yeah, there is thisdynamic which, you know, you kind ofhave to break to get the market's wellfunctioning. That I just need to be,like, the assets need to be wellprepared.

They need to be with a crediblegrowth story. You know? Ideally,there'd be more primary structurerather than secondary as in newmoney for the company to investrather than paying debts that thesponsors would put on to run to dothe buyout in the first place, that kindof thing. So there there's a dynamicthere which because, you know,talking about the difference betweenNew York and London is Europeaninvestors are less willing to haveleverage on their assets as opposedto the US investors, that kind ofthere's there's there's things like that,which mean that, you know, thismarket structure aren't necessarilyideal for sponsored by Brexit.

But it's, you know, it it's very, I'd say,important that, there's, like, an opendialogue in in the way the valuation isdiscussed because it's you know,people have mismatchedexpectations all the time. And, that'swhy things all over, right, do good.And IPOs are a huge amount of work.You don't want to IPO ever, really, ifyou think you're you're gonna have asituation where you can't ever bridgethe gap between the buy side andsales of woodwinds.

And then in that pretty difficult overthe last few years because we hadthe pretty heady days of twentytwenty and twenty twenty one, wherethere was significant capital beingpumped into companies at pretty loftyevaluations. We've we've beendealing with the aftermath of that atleast on a private basis in that, youknow, valuations have been taking ahaircut over the last couple years withthe recessionary pressures that we'vebeen facing. But if you do have thosecompanies who are still late stagecompanies that are very highvaluation and, you know, looking at anIPO might result in a bit of a haircut tovaluation, it's a tough, toughdiscussion to be having, but there stillremains that element of prestige tobe a, you know, a public marketcompany.

And, you know, over the long term,you're assuming that market cap'sjust going to flow upwards over timeprovided the company performs. Butthere is that initial, as Mike says, thatinitial gap to bridge and and andwhere we are on formation.

So, you know, everybody needs to berowing in the in the same direction atthat point.

And there's a bit of I mean, what'syour take on, like, private, VCvaluations? Because some of thethings I see is not necessarily avaluation. It's more the companyneeds this much money to survive thenext eighteen months, and it's willingto give ten percent of equity in aboard seat, all that. And it's like thevaluation is like a mathematicalfunction function of that. And, yeah,maybe when you've got a revenuetrack record, you can do a properdiscounted cash flow and, you know,evaluate you know, look at theEBITDA and all that kind of stuff. Butthere is some voodoo stuff going onthere, I think.

I think that's maybe the the right wayof looking at it. It is more of an artthan a science until we get into thelater stage rounds, and then peoplewill start really kicking the tires, youknow, on ARR and multiples thereof,perhaps if it's a SaaS business.

So there will be some pretty harddiscussions, and we did see thatduring, you know, the last coupleyears, to just, you know, have thesereflect reality. And, you know, I'vebeen on a number of calls whereinvestors were saying, you know,capital markets are doing x for thiscategory or this sector, and you'reasking me to invest at y. It justdoesn't make sense. So I think withthe capital markets coming down,that at least brought a lot of thevaluations down where they neededto be in in in a lot of private rounds.We didn't hear announcements aboutthem or anything, but somecompanies have readjusted duringthat phase, and it's probably to theirbenefit over the long term, frankly.

Because the I I guess what we notedis the founders that really duckedtheir heels in and, you know, pushedto retain the valuation out of flat orabove what they were expecting.

Those companies might not bearound anymore because nobodywanted to fund them. So, you know,it's it's often survive or die. And I thinkthe ones that did take a realisticapproach to valuation, understandingthat, you know, there were somepretty it was a pretty aggressive bullrun for a while there.

They're pretty well placed now to tolook at a capital mar capital marketsexit.

Yeah. That's really interesting. I Iwanna shift gears a little bit now and,talk a bit about, how m and a and IPOmight interact with each other. Soyour combined skill sets cover both,IPOs and m and a's. I'm curious to getyour take on how these twostrategies might enable or impacteach other, for late stage founders.Where can they perhaps complementeach other, and where should they fitwithin the life cycle of a company?

Michael, it's probably one for you, Ithink.

I mean, it's yeah. I think I mean, we'llall should we won't have stuff to sayon it.

The I mean, if you think about m anda as a strategy for the IPO candidate,that as a sort of substitute for organicgrowth ultimately, and, you know,what are the growth expectations ofthe business? Because it's like, if it'sso in a very simplistic, there's sort oftwo different kinds of I can count this.It's like a a dividend yield candidatewho is already profitable andthrowing off money, and, you know,people look at it as a kind of I'm sureyour growth is always part of it, butit's something that throws off cashalready. And then there's, like, agrowth stock, which has got a longway to go and needs lots of kami kaicapital intensive in the early years tobuild out. What he wants to do mightnot necessarily reach breakeven for awhile, that kind of thing.

So if you if you want to do m and arather than organic growth, I mean,that is a, you know, or can be a sort ofcore defining characteristics of whichwhich side you you fit in. Because ifyou're still looking at m and a as asort of differentiator in terms of yourstrategy, it looks like, you know, youcould be perhaps more in the sort ofdividend yield kind of stock or youryou know, like, when Meta, Facebook,or Instagram, you know, you're likethe you're like trying to grow intodifferent channels and that kind ofthing. So it's quite interesting from astrategy perspective what it actuallyimplies. And and there's a big impacton the preparation because of yeah.We were involved in IPO on Nasdaq,earlier this year, and they, yeah,wanted to do a big acquisition in theUS in order to help, you know,reshape their equity story so that itlooks and felt more like a US businesswas one of one of the, you know,rationales for doing it. And thatenabled pass through US IPO.

There's lots of other reasons whythey did it, but it, you know, made lotsof sense commercially as well. But it itdid enable them to pivot into that,kind of structure because they had alot more of a revenue footprint in theUS, and so we're able to get morecredibly tap US investors.

Because it is very difficult if you're apure, you know, European companywithout a, any US footprint or withyour revenues really to attract theattention of your investors in the USIPO. So that is that is one, you know,strategic route that people can use.And I think, you know, when you'redoing that, it does affect, you know,your equity story, how you'representing your business, thefinancial track record you need tolook at, you know, how you theintegration challenges that come withbig m and a, you know, what happensto your metrics, IFRS, non IFRSmetrics, that kind of thing, which is achallenge because investors mightwant to see what have you integratedthat business. What's the what's theone full year financial period wherethe how do they perform together?You know, what's the synergieslooking like? How they've beenexecuted?

The new targets, the business of life.So there's a big for material m and a,there's a big reboot of the wholeequity thesis and execution that'sgenerally needed, which could delayyour IPO, ultimately, or it couldsupercharge it and enable it if youcould do the right acquisition.

And, you know, doing m and a quiteclose in IPO, if you're listing with quiteambitious targets, you couldpotentially miss those targets moreeasily because you're not necessarilyin control of all the levers as you'd asyou'd hope. And if you miss targetsearly on after listing, that can be a,you know, an issue for the sellingshareholders because they mighthave to hold longer because theymight not be able to break theirlockups or the aftermarketperformance where where, you know,sell downs in a way that particularlyprivate equity would want to selldown quite quickly. So after as muchas they can, because ultimatelyprivate equity will need to get out ahundred percent.

So there's quite a lot of competingfactors then if, you know, you end upwith doing lots of m and a, thenyou're in kind of complex financialhistory, it's called, which is a big sortof challenge from the pure financialreporting stuff you need to do for anIPO prospectus. It just gets more andmore fiddly to get the numbers acrossthe three year track record allconsistent with one another withdifferent accounting policies andmetrics and that kind of stuff, which isa real headache for multi accountsand the lawyers like us. But, and forthe company as well, right, obviously.But it is really yeah.

So, I mean, m and a is obviously reallyfascinating part of it. And on the onthe other side, there is do investorswanna sell the business or IPO it, andthat's the kind of dual track debate.So run both in parallel, how much of adual track? Is it really easy?

You ever you know, do you choke biasone track or the other? That kind ofthing. So there's lots of, interestingdebates around that, particularly withfounders who, you know, are gung hoon the IPO. You can see that, but youcan have, you know, private sponsorsmuch more thinking.

They'd rather sell it, not not goingthrough the IPO crisis just because ofthe you burn a lot of calories on anIPO, and, running them both in parallelis is is difficult.

I think it's really interesting what youmentioned about, thinking about, like,if you are planning an IPO in the in thein the medium term, like, even thoughon face value, like, a strategic m and amight look really positive from, like, acompetitive advantage or a, market,you know, penetration perspective. Itactually creates a load of extra workbehind the scenes that then, youknow, might might actually delay theIPO that you might not have evenconsidered. Right?

Yeah. I mean, you just have toapproach it with your eyes open and,you know, probably throw some extramoney at it in terms of resourcing andexternal consultants and that kind ofstuff to make sure it really works justto make sure that you don't prejudiceyour IPO at all.

Yeah. It is you know, I've beeninvolved in a number of transactionswhere there have been complexintegrations going on, and it it can betricky, to get everything aligned.

Makes sense. Then let me throw thisnext one to you.

Oftentimes with earlier stagecompanies, VC backed companies,they have quite aggressive growthexpectations. And then if you'relooking for that liquidity event laterdown the line, one of the key thingsthat people need to bear in mind is, isabout having having the structuralcompliance in place to make sure thatthat that is a, you know, a relatively,straightforward process. You're nothaving to, you know, rebuild thecompany from scratch when you getto get to that point. How how shouldcompanies kind of think aboutbalancing those two those twothings?

Yeah. So sometimes, I guess, you cansee them as competing interests, but,in the venture capital world, I guess,you you still operate on that ethos ofmove fast, break things.

And then when you come up to anIPO, you're then told to be extremelycompliant. So there's, there's there'sa disconnect there, let's say, in termsof what expectations are, I guess.

We always see companies comingthrough much earlier stage at, youknow, series a round where wealways call it, naughty teenagersyndrome where, you know, thecompany has not been maybe ascompliant with GDPR or dataprotection laws or whatever it maybe, but that's generally just a functionof money.

And that can be remediated throughthose funding rounds.

It's more if they are actually doingsomething which is a business modelfundamentally, divergent to the law orwhatever it may be that, that's whereyou're gonna have a really sticky IPOlater on in life when you startwarranting how the business was,was built and and and how itcontinues to operate. And I thinkyou've seen a number of companiescoming out of the earlier vintages inthe kinda mid teens, coming up toIPO, having to remediate a lot of theirbusiness model prior to an IPO, orthings have been picked up as part ofthat that diligence exercise.

And I think that was a function ofthose companies during that vintagebeing, you know, aggressivelypursuing growth as well too.

Whereas the dis the the discussionhas really changed into how are yougoing to build a pathway towardsprofit and that sustainable float, let'ssay, that every dollar you create is,you know, gonna be self sustaining toto build the business.

Yes. Growth works very well, but itcan create some bad habits as welltoo.

And if you don't have that eye onprofitability over the long term, you'regonna have to eventually, at one pointor another, have to return and dosome surgical operation, to adjust forprofitability.

And and these are all things thatyou're gonna have to do prior to anytype of capital markets transaction.

Although some markets take a adifferent view as to, you know, wewere talking earlier that, you know,New York's great for a growthcompany.

And we're trying to change thingshere in the UK.

So it's it's a tough discussion, and it issomething the lawyers frequentlyhave with the companies as to, youknow, these things need to beremediated. And any good venturecapital house will be coming into thecap table and saying, these are thethings you need to do, to get you in ain a decent form for a decent exit indue course.

And, you know, we see crossoverrounds is what they're called as welltoo often in the life sciences sector,where you're starting to bring publicmarket investors onto the privatecompany's cap table to get themfamiliar with the company, but also tobring that rigor, of an expectation ofa, you know, a fidelity or others on onthat type of cap table.

So it's all to say it comes down tomanagement ethos probably andwhat they've been really encouragedto do. If there's a gap in the market,for sure, go after it, as you should andaggressively.

But you should have a I know we'llwe'll sell our own book here, but youshould have a good group of lawyers,at least in your ear the whole waythrough to to to try and at least, youknow, keep things within theguardrails that everybody be happywith.

Yeah. I I think that's that's a reallyinteresting you made a fewinteresting really interesting pointsthere. I really like that idea aboutbringing someone from, like becauseyou said earlier, you've got differenttypes of investor that might havedifferent perspectives on valuations.Right?

You've got VC companies that mightmake, you know, like, you know, theremight be a funding round that actuallyis driven by not the companyvaluation, but other other elementsthat might be. Like, it might be a itmight be a function of other thingsthat are going on. You need anotherboard to see. And I really like thatidea about bringing someone fromoutside of, like, the VC world onto theboard to help you kind of set thepathway really to that, to that IPO.

What are the So you're not I mean,sorry to to jump in, but, yeah, it's notuncommon to reserve some of yourboard positions for nonexecutivedirectors with people who havegenuine chops in certain areas thatmight be useful for you.

And just I I think it goes to afundamental point for founders is, areyou bringing in people who are goingto just support what you say, or areyou bringing in genuine expertise andpeople who are smarter than you, inareas that you you don't necessarilycover? And the the latter are thecompanies that I think just performmuch better. So we always suggestthere's a there's a cup at least acouple of NEDs, sitting on any type ofboard, especially in that that IPOpreparation phase.

Yes. I agree. People definitely do thatto diversify their cap tables. They canin the right IPO with sort of crossoverpublic market investors, and you cansee, like, free IPO cornerstonescoming in as well.

All of that, you know, not supercommon here in other markets. It'svery common and, you know, gettingmore common here. And it's that's away to try and derisk an IPO as well ifyou know you've got, like, twenty fivepercent of the book covered with oneinvestor coming in and that kind ofthing. I think a lot of the success onthat goes, if you have crossover fundsin the book and you create thisregular dialogue with investorsthrough the public market, investorsthrough early look meetings, and thatkind of thing as you go through thelatest stages of of the cycle to preIPO, then that will only help, youknow, you build confidence withpublic market investors and, youknow, help to try and derisk the IPOas much as you can because I think,you know, what you want is just onvaluation.

You want real time valuable feedbackfrom public market investors on whatyour valuation is based on how thehow the really company is performing,which you're gonna you'll only getthat if you have regular dialogue withthem.

Yeah. I think that makes total sense.You you're because you're then you'rewhen you're bringing on your latestage investors as a late later stagecompany, you're not just getting thecapital, but you're also getting the theknowledge expertise and, like, theinsights and and everything else fromthose, those crossover funds.

And that sort of that's something Imentioned earlier, sort of private IPOconcept is a is a sort of step forwardon that, which is where you sort ofinstitutionalize a sort of annualfunding round with a sort of flawlesslike a club deal of sovereign wealthfunds, public market investors, youknow, sort of three percent or fivepercent a year just to diversify thecap table again and again every yearand almost pay, you know, becomelike a listed company.

Mhmm. And then trans make thattransition the big step up to the publicmarkets much more, you know, muchless of a, of a scary leap and, youknow, potentially doing annual reportsbefore you necessarily have to thatkind of thing, just to get in the grooveof the reporting applications that youhave when you're listed as well, whichcan be a challenge.

Yeah. That that sounds really smart.

I wanted to get your both yourperspectives on on something elsenow. I know that, having spoken toyou both previously, it's obvious thatdue diligence is a really important,piece of of kind of of going throughan IPO.

What are the key things that youwould suggest that people thinkabout before they embark on this thisjourney?

So I think from a I mean, there's no allthe skeletons will be uncovered,basically, because it's very rigorousfrom particularly the underwritingbanks and their council will and, youknow, the company council both beissuing, you know, US disclosureletters, which say there's noemissions in the prospectus. And thatis a really high standard of somethingfor lawyers to stand on on. Thenthere's obviously diligence, lots ofother spheres as well as reports tothe accountants, be able to financialdiligence, that kind of thing. Sothere's a huge you know, it is basicallyeverything is up for disclosure, andthen you have to synthesize then putit into the perspective.

So, you know, as Dylan was saying,historic issues that need remediatingwill hopefully all be revealed in thisprocess, particularly with material. Soit is, you know, a a one offopportunity, really, to get everythingout there in and you can disclose thatin your section of perspective calledyour risk factors if you have specifichistorical issues or inherent risk, inthe business model that need to bedisclosed and things like that. I mean,obviously, you need to do it in a wayto understand, but it is ultimately, youknow, the opportunity to kind of if youare selling, the underwriters are superinvested in making sure because they,you know, get reputational risk andother issues in certain marketsbetween US.

In terms of liability, the directors areobviously on the hook as well. So youneed, you know, everyone everyone'sinterest and very much aligned inmaking sure the disclosure iscomplete and and everything. Butyeah. And that's one of the reasonswhy the process is is as involved as itis. Also, the regulator, you know, theFCA or the s s SEC would also becasting their eye over theperspectives and asking questionsand also to prove it.

And every everybody appreciatesthere's sector specific risk factors aswell too. So if you're a life sciencescompany, it might be, you know, drugdevelopment pipeline is, you know, arisk of not getting through a certaintrial or if you're in a, you know, heavyindustry that there might be ESG orpollutant risks. So it's just forinvestors to go in eyes open, butpeople do appreciate that eachbusiness does have its risk andthey're not there to take a judgmenton. You can invest or not invest offthe back.

It's a very well shortened path toproportionally disclose stuff and gothrough the process. It's justobviously for for every company. Youknow, you only IPO once, hopefully, intheory anyway. But so, you know, soit's obviously a big thing for people togo through when they're actuallydoing it.

Yeah. A hundred percent. And sogiven it's such a such a bigundertaking for a for a company, I'mguessing getting the right people onthe team to begin with is a reallycrucial part of this.

Yeah. So some companies, they getIPO consultants on board to helpthem manage some of these things.But yep.

Yeah. Are are there any are there any,roles or functions that are mostcommonly overlooked in in your eyes,Michael?

I think the pressure on the financeteam is acute. I mean, I've not knownany finance team with an IPO tosurvive an IPO unscathed, if you knowwhat I mean, in terms of retention andattrition. It's it's a very demanding,process.

You know, just to step up from theonly thinking about EBITDA, thinkingabout earnings per share and, thenworking out what your reportingmetrics are gonna be under IFRS andnon IFRS, the like you know, it's just aand then all the comfort package withthe reports. I mean, it's a hugeexercise. So I think scaling up, yourfinance function and function is iscritical. Having the right bandwidththere, and, an IPO consultant can be agood, you know, person to help withthat. And, also, there's, you know,independent banks like, you know,lots of people of people of that whodo help companies on that kind ofthing as well. It doesn't prep, as wellas sort of still the investment banksand, also, you know, having a goodlawyer is helpful as well.

Definitely.

Perfect. So I know a lot of thelisteners to this podcast are kind of,from, mid to to late stage kind of VCbacked companies, who might nothave done this before. I'm curious toget your, take on what a typical, like,twelve to eighteen month journeywould look like, on the road to IPO,what are the key things that youshould be thinking about to beginwith? You mentioned getting on IPOconsultants.

What are the what are the kind of,hurdles should people be getting at?

I mean, I think having the right teamearly to give you initial advice, I thinkbecause what you because whatyou've got to do is do a lot of things inparallel.

And there's lot and there are certainstages along the way, and some, youknow, people are are sort of keen toget feedback. So you're gonna craftthe equity story. You've got to pairthe company structurally. You've gotto think about, what does your banksyndicate look like. You've gotta thinkabout who are the target investorsand, you know, what's the targets ofthe business, you know, andeverything like that. And then you'vealso got to run the business at thesame time.

So you almost you know, it's like a joband and a job. And so you gotta thinkabout how you execute that internally.You know? You're gonna have oneperson who's doing it delicately.

So the CFO is are they gonna be incharge of the IPO and CEO takes onsome of the CFO's job for that time?And so it's like there's a real, yougotta think hard about the ex sort ofhome team and the process.

And then, you know, there's just forthe project management side of it is,you know, you gotta collate everysingle material contract in thebusiness, put it in a data room. That'sa very quick thing to say.

You know, in the UK, you gotta verifyevery statement in the prospectusunless every material statement,obviously, that not every statement,but it is a large chunk. You know,that's something very easy to say, butis takes a, you know, a team of peopleand a lot of documents, a lot of hoursbehind it to do that. And similarly,when they report to account inside,there's lots of huge amount of workas well. So it's it's just sequencing it,planning, understanding themilestones because you gotta starttwelve months out and then think andthen also you gotta target a window,you know, because you can't just IPOwhenever you want. There are certainwindows in the year when, when onlywhen you can IPO, the financials gostale after a certain period.

Certain amounts of accountingcomfort, all that kind of stuff, youknow, to be delivered at the rightpoint at the right time. So you canonly IPO, like, two or three times ayear.

And, so you have to work backwardsfrom from there, really. And then alsosome people do, like, the let's redothe website. Let's rebrand. Let's thinkabout, you know, is this refreshingboard to get public market, you know,INED's on board and that kind ofthing. Let's rewrite all of our policies.

Realistic company that put in place ashare incentive scheme.

You know, there's, is a huge amountto think about that you can preparefor. But if you plan it and get the rightadvisory team on board, it's, youknow, it's definitely all doable.

The key in my experience really is totry and have fun through in theprocess as much as possiblebecause, ultimately, it's a kindaconsensual thing.

Everyone's interests are aligned. Thebanks want the want it to happen. Allthe advisers want it to happen. Theshareholders want it to happen.

You know? So it it should be, as hardwork, but, you know, and but it shouldbe enjoyable at the same timebecause it's not an adversarialsituation. So that's from a culturalperspective, it's key. It's important tomaintain your culture whilst whilsttrying to do something as difficult asthis.

You gotta have my view is you gottahave fun whilst you try to do it.

Yeah. That I think that makes sense.I'm sure I'm sure some of the financeteam who are kind of under thecautious last minute, they'd be nothaving that much fun.

So when we were I was pricing a verylarge IPO in in a number of years ago,and we had this path diversions, allthe numbers were blocked.

And so we were it's like two o'clock atnight, and we're getting the numberspopulated. And we decided todecamp to a local bar and get all thejunior lawyers to various marked upversions, which we went through inthe in a bar in Shoreditch, and thentell them to the princess to getfinalized.

So it's possible even for the financeteam to have fun at the very lastminute because I'm surrounded byvery bemused hipsters in Shoreditch,wondering what the hell a bunch ofseats are doing in the.

Awesome. I love that.

From obviously, there's a lot of workthat goes into, the planning and, like,the getting your house in order to toto IPO.

Let's say for some reason you're inthe middle of that and thensomething changes at the last minutewith the market, something changesin the regulation or something elsehappens. How easy is it to then just,you know, leverage all of that hardwork you've done into, like, a differenttype of liquidity event? Maybe you goto private equity instead. Is a lot ofthat just easily lifted and shifted, or isthere is it, like, a completely differentprocess?

I mean, you never you can never beton an IPO happening until you price.You know, it's it's, you know, you it'snever certain until that. So there'sthere's always an element ofuncertainty. People always still thinkabout plan b. Ultimately, people arealways thinking about the nextwindow.

I mean, you know, you could have,you know, Ukraine war. You know,stuff like tragedies like that. Right?

And people are trying to launch IPOsin that market instead of alwaysstressing up I need to do that, Mike.

I literally had one IPO launched, youknow, the day of the invasion. So andit you concerned, you know, whetherit was gonna get lessened.

The markets are quite resilient.

Yeah. Just but, ultimately, you wannaget the right price for your show andthink about the aftermarket as well.So, you know, you you can definitelypause stuff and dust it off six monthslater and just refresh, bring down, geta new set of, you know, interimsreviewed, if you need to, whether youreport to the accountants or anotheryear end audit done and, you know,bring down all the disclosure of theprospectus. You know, that that's achunk of money, and it but it's easierto do because everyone's geared upand understands the process andwhat what's they've got what they'vegot to do. So you're just sort ofrepeating it in size.

So you can definitely pump pump anIPO. I think the, you know, pivoting toa a sale, I mean, basically, you justturn your prospectus into aninformation memorandum and to doan auction process. You've got yourlegal financial data room for theunderwriters council and thecompany's council and the reportsaccount to select that, you can justscale that back and turn that into a amore proportionate m and a dataroom because you wouldn't discloseeverything. You'd disclose theunderwriters to an IPO, so you'dwritten bespoke one.

So it takes a bit of work to but it'sdefinitely you you can pivot. Andthat's what a dual track is, really,where you've got you kind of you'rerunning the two processes in parallel,and you're kind of leveraging for onefrom the IPO track and using thatstuff. So the financial DD report willbe will look very similar to some ofthe accounting financial stuff that'sbeing done for the IPO. So there's lotsof synergies between a dual track anda sort of between m and a track and aIPO track or a or a dual tracktransaction.

So that's so you could easily pivot ifyou're just doing an I only an IPO pivotto a sale.

Most people tend to if if the IPO ispublic, you know, if you put your headabove the parapets and people areaware of it, I mean, most people areaware of assets that are likely to IPO.But if you have actually gone publicand there's kind of discussions aboutvaluation, I mean, that means it mightyour IPO is kinda setting, it looks likea ceiling to your m and a price at thatpoint, which people might need to goback and kick the tires on the EBITDAperformance or, you know, do an mand a transaction in the US to try anddifferentiate the story a bit. Butthere's some knock onconsequences. You can't just flipimmediately if you're kind of visible.

And that's this is all the kind of stuffthat priority community think aboutquite carefully, obviously, dramatizetheir assets. But, but, yeah, it is all it'sall doable.

And we've seen every conversation,obviously, because the markets havebeen pretty choppy.

Again, it's thing.

Sorry. I still don't understand.

It said it's a function of money andhow much you have of it.

Yep. Yep. Yeah. Makes no sense.

Just a couple more questions for mebefore we wrap up.

One thing we've talked a little bitabout is, like, is the differencebetween the London Stock Exchangeand the Nasdaq and other and other,other other other listings you can do.

What are the key, kind of things tobear in mind for a company that's justthinking about? Should I list here?Should I list there?

Yeah. It's a great question. It's verytopical.

Endlessly debases. Right? People Imean, historically, people used toavoid the US like the plague becauseof the liabilities attached to it.

And, you know, with SARB, it wasintroduced to all that kind of thing,which US was perceived to be muchmore earnest because you could listin London. You could still list inLondon and tap US investors. That'scalled a one twenty four a offer. Thathappens every day of the week.

So you have the best of both worlds.And then over time, there's aperception that, you know, if you're atech stock or you're some kind ofgrowth stock, just given the successof the West Coast and how deep theUS capital markets are, You know,those those performances are justreally strong. And, obviously, USeconomy has grown better thanEurope since the financial crisisgenerally. So the kind of share pricesof those companies have performedsometimes better because they'vegot a better growth to the homemarket and that kind of thing.

So there's lots of factors, you know, interms of liquidity, day we know what'sthe daily trading looking like? What'sthe the aftermarket performancelooking like? What's the IPO poplooking like? The US have just got itsorted because they've got a lot oftech companies that are high growth.

They've got they value growth.They've got a big retail participation.

As I said, in the in UK or Europe, youknow, we've kind of well, and this issomething that applies across theboard. You know, the number of listedcompanies go down a lot. Thatapplies in the US as much as the hereto UK and Europe. But in the UK,there's a perception that liquidity is abit less.

The research isn't there for techcompanies. Perhaps growthcompanies don't get the rightvaluation because people wanna seemore dividend stocks rather than,these growth stocks. And but thatwhole perception is changing, and theLondon stock has changed a lot ofresearch and about do you sort ofdispel some of the myths between,you know, New York and London.Because if you strip out sort of Tesla'sand the net Netflix and the Meta'sGoogle's of the world, the averageliquidity of your average US stockversus your average London stock'sabout the same.

I think it's marginally higher in Londonfor some.

You look at the performance. Again,the performance of US companies arepretty strong, but if you get a UKcompany and you list it, you what'sthe performance of that? Andgenerally, the performance is prettypoor, like very poor, particularlyduring the SPAC boom. Let me log outto Kazoo and others.

So, yeah, you've gotta think aboutwhat's right for you as a company.Right? And you as I said earlier, if youdon't have much of a revenue trackrecord in the US, your market cap isbelow, like, ten billion. You're notgonna have much brand recognition.

US investment is not really gonna bethat interested. It's just, you know,three thousand or whatever youwould be on the modest of marketcap. You know, you'd be prettyanonymous company subject to, youknow, onerous US litigation, plusaction environment, you know,directors and liabilities insurance ismultiple times that it's under for areason.

And so, you know, it is it's a differentmarket. Right? If you're the rightcompany, it can be amazing like Arm.There's only so many arms, and Armwould have been successful whereverit is.

So the US is, I think, is the maincapital markets, but I think it'sprobably London's reforms will reallyhelp, I think, reweight the regulatorybalance.

And then I think, you know, hopefully,companies will look at the UK giventhere's enough blue water sinceBrexit.

You know, and I've got a stablegovernment majority and all that kindof stuff with a renewed, you know,enthusiasm just given it's a relativething, right, in terms of geopolitics.Yeah. The UK could have a pretty longmoment in the sun as a kind ofindependent financial global financialcenter that isn't part of any of the bigblocks as a kind of stable Wimbledonesque situation, which I think wouldbe the right outcome, right, for forLondon based on where it is today.And I think as some of the rumorsabout Sheen looking to listen inLondon demonstrate, you know, thereis demand for deep capital markets,which London I mean, there's noother in London, it's very similar to,like, the depth. I mean, none London'sraised more money in the secondarymarket as price issues and entryoffers the whole of Europe togetherbasically in this year. So it's it's like avery successful capital markets and isonly your competitor is New York.

And so that's the way we should lookat it. It's a very effective market.

And we what I want to see it be asgood at tech, all the kind of VCcompanies that Dylan and I lookedafter as well. We wanna see themlisting in London, because that's sortof the right place on the list.

Yeah.

And and tying it back to some of thethings you mentioned at the start,some of the reforms that are comingin should hopefully make that moreattractive place for some of thesetech companies to Exactly.

Exactly. Until yeah.

And there's a reform of research and,you know, the mansion house andeverything. We're trying to help thebuy side. So everything is trying to totry and reboot the system, and get itback to what it was. Because you,you know, obviously, UK was anominal place to raise money andgrow business on the public markets.

And we've got the second best VCmarket in the world as wasannounced, you know, one of the,people announced that this bigconference called Capital MarketsIndustry Task Force in London onFriday, that the UK has got the bestprivate equity market in the world.We've got the second biggest pool ofpension savings in the world. There'sno reason why we cannot have, youknow, as good a listing venue as NewYork and as flourishing as New York.And so I think we will, I think we will if,you know, we continue to push on thisbefore big reform agenda.

Hundred percent. Dylan, do you haveanything to add? I know Marco'sgiven a fairly comprehensivebreakdown.

No. I was I was enjoying it quietly.But, no. I think what one of Mike'smain points is, and I we're in much inagreement on this is, yes, the US isvery attractive and we're all for that.You know, life sciences companies,there's a very well trodden path ofheading towards Nasdaq.

We we totally appreciate that. It's it'staking an honest look at yourcompany and understanding what isthe right venue or pathway to exit foryour company and being very honestabout that. So I think we're in thehabit of, you know, it might yourGerman company might be Frankfurt,frankly.

No pun intended, but it's, it you know,we're we're trying to keep companiesin the venues which make the mostsense for them where they will havethe most support going forward.

As Mike said, if you don't have a USstory to tell, it's going to be a verydifficult list for yourself to startlooking at a New York exchange. So,yes, you can compliment that withsome m and a or organic growth inthe US. But if your principal businessis elsewhere, you really need to be amonster of a company to start lookingat at going overseas.

Whereas home jurisdiction will reallysupport you is what, what our hopesare with, especially with the reforms.And, you know, there should be newprivate capital to bring you becausethis is also the larger issue as well,too, as we just haven't had as much,growth capital. And that has beensupplemented over the last ten tofifteen years by US capital coming into help companies in the UK stay stayprivate for longer. And, obviously,when you have the number of USinvestors on your cap table or NorthAmerican investors, and this is nofault of theirs because I'm verysupportive of it, but, obviously, yourdirection of travel will be more gearedtowards North America. Right? So,again, you know, it's kind of a finalpoint is just be honest with what yourcompany is and what the go forwardis. And now, hopefully, there's enoughsupport within the UK ecosystem toto keep you home.

Yeah. I mean, it's like historically, isn'tit? Think about, you know, all the UKpassionate funds investing in Google.Google then, you know, buysDeepMind in the UK.

And, you know, we have subsidizedthe cost of capital to Google becausewe're lowering it because of, youknow, invested in it. And then theybought and made the success of, youknow, the UK's leading AI, you know,company. And so, you know, intheory, like, it'd be good to see moreUK still exploring UK investorsupporting companies through thatscale up so that they could thennaturally list in in London. I thinkthat's a big so that is a big missingpiece of the currency we saw.

Hundred percent.

Listen, Dylan, Michael, I've reallyenjoyed the conversation today, andI've kept you a bit longer than weinitially, anticipated, but, it's been a alot of valuable insight here.

Before we wrap up, I just wanted toget both of your perspectives on onething. What would be your top tips fora company, globally expanding,currently thinking about potentially anIPO on the horizon? What would yourkey, advice be?

I'd go ahead. You can Yeah.

Keep it fun, basically, but they alreadysaid that.

You can say voice.

Do I say voice?

I I I would say, you know, just makesure the coffers are full, because a lotof people have tried to expand veryquickly on limited budgets.

Make sure you're well prepared as towhat entering even one jurisdictionmeans.

It's, you know, there's a lot of unknown unknowns that that will cropup and make sure you just have thatadequate buffer and the supportinternally from shareholders andboard for for those decisions.

Makes sense. Perfect.

Alright. Thank you so much, Dylan.And Michael, it's been great to speakwith you today on the GlobalWorkforce podcast.

That's great to be here.

Thanks thanks so much, George.

I really appreciate it. Have a lovelyday.

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