During large IPOs, we recommend that companies get advice from an independent investment bank that can look over bookrunners over their shoulder and make sure they don`t leave too much money on the table for investors. The perceived wisdom is that it makes sense to lease an IPO, so that the share price rises immediately after admission to the market, because when a stock goes public below its issue price, it is much more difficult to regain investor confidence in the stock. As a general rule, an IPO at the end of the first trading day would be about 5% lower than the expected market price. However, an inherent conflict is that banks maintain their key customers who invest in the IPO happy (by increasing their investment after the IPO) instead of ensuring that the founders/controlling shareholders receive the full value of their shares (which reduces investor profits). Normally, a new service contract or letter of appointment would be implemented in anticipation of the IPO. You want to ensure that you receive separate contractual compensation for the commitments of the company`s directors and ensure that the company remains insured for you as part of an insurance policy for directors and executives. You also want to review the terms of a service contract or letter of appointment. The typical bargaining points of a service contract are the termination clauses, the possibility for the company to put you on gardening holidays, the extent of your obligations and your overall compensation package. They may also be asked to do a non-competition that should be subject to careful consideration.
If you are a director of the company, you must assume responsibility for the information contained in the prospectus and be a party to the insurance agreement (as a director), as the Bookrunners require guarantees from directors, as they will with the existing founders/majority shareholders. Upon request, we can provide you with a detailed memorandum on the commitments of directors of a company with a premium list on the main market of the London Stock Exchange. Companies with a premium list are required to either comply with the UK corporate governance code or explain why they do not respect compliance. Bookrunners are generally interested in the fact that in addition to the chairman of the board, there are at least two non-executive directors, there is a chairman and an executive director, and the company has a CFO experienced in the CFO of listed companies.