Eastern Chamber of
Commerce
Challenges faced when going Public
September 11, 2013
Challenges faced by family businesses when going Public
Section 1
Why do family-owned businesses want to IPO?
Section 2
Listing requirements and investor expectations
Section 3
The key challenges faced
Section 4
What changes can family-owned businesses make?
2
1. Why do family-owned businesses want to IPO?
• Enhances the business’s profile and reputation
• Provides an exit route for family members by divestment
• Provides capital to finance expansion
• Provides acquisition currency in the form of shares
• Diversifies the Company’s balance sheet
Its important to have a clear rationale for IPO
3
The IPO Journey
PrivateCo
Wider
stakeholder base
Reporting
deadlines
Information &
Disclosure
requirements
Corporate
history &
track record
Market
scrutiny
Public
valuations
Financial
prospects
Governance
&
Transparency
Reputation &
Corporate
citizenship
PublicCo
28 July 2013
PwC
2. Listing requirements and investor expectations
•
•
•
•
•
•
•
•
•
•
Free float requirements
Shareholder expectations management
Independence requirements
Good equity story
Strong corporate governance
“Clean” historical financial track record
Strong internal control environment
Ability to comply with ongoing reporting requirements
Transparency
Management compensation linked to performance
There are a number of external stakeholders once listed
5
3. The key challenges faced
• Small stakeholder base with dominance of family members
• Distinction between onwerhsip and stewardship
• Change from “instinctive management”
• Independent challenge at Board level/ Public company
corporate governance structures
• Transparency and disclosure requirements/ concerns
• Generally weaker financial control
• Prevalence of related party transactions
• Lack of transparency
Many aspects of public companies don’t fit
well with private family-owned businesses.
6
4. What changes can family-owned businesses
make?
• Focus on responsibilities to a wider stakeholder base
• Better understand the divide between ownership and
stewardship
• Balance the Board and include independent nonexecutive directors
• Implement robust corporate governance structures
• Enhance reporting and internal control procedures
• Enhance transparency and disclosure processes
• Enhance the corporate structure where applicable
Early preparation and recognition of a change in corporate
culture is key to success
7
Russell Taylor
Deals KSA Leader
Russell has been with PricewaterhouseCoopers since 1993 and is a
specialised Deals Practioner based in Riyadh, Saudi Arabia, having
transferred from PwC London in early 2009.
Russell has over 19 years experience in the full range of transactional
work for corporate and private equity clients, including 3 years in the
Tokyo office. He has global deal experience, having undertaken
projects in Kingdom of Saudi Arabia, Germany, Italy, Ukraine, US and
across Asia Pacific, as well as in the UK.
Russell Taylor
PricewaterhouseCoopers
M: +966 569 311 700
Russe..j.taylor@sa.pwc.com
Russell has significant deal experience in a variety of sectors,
particularly Construction and Contracting, FMCG, Retail, Distribution,
Manufacturing and Industrial, and has led PwC teams undertaking
multi disciplinary due diligence on transactions, involving financial,
commercial and operational due diligence teams.
Russell has led transactions in a variety of industries in KSA, including
core M&A, Valuations, Disposals and Strategic reviews
Russell led large IPOs in KSA in the construction and contracting,
retail, industrial and business service sectors, including the IPO's of
eXtra, Al Tayyar, Takween, National Medical Care and General
Lighting Company, and is currently leading teams on 4 other IPO’s
currently going through the CMA filing process.
8
The information contained in this presentation is for general guidance on matters of interest
only. The application and impact of laws can vary widely based on the specific facts involved.
Before taking any action, please ensure that you obtain advice specific to your circumstances
from your usual PricewaterhouseCoopers client service team or your other tax advisers. The
materials contained in this presentation were assembled on 11 September 2013 and are
based on the law enforceable and information available at that time.
© PricewaterhouseCoopers, January 2013. All rights reserved. PricewaterhouseCoopers
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