How to develop growth companies by building stock market eligibility

The economy is currently in a weak state, and the so-called listing booth is closed, for now at least. The current situation provides an excellent opportunity for growth companies to develop their stock market eligibility.

The goal of preparing for stock exchange eligibility does not have to be stock market listing. Developing the aspects required for listing will improve the quality of any company's operations, administration and processes, as well as facilitate growth management. Such strengths will move the company to an advantageous position in weak economic situations.

Building stock market eligibility is an excellent goal for all company owners who want to ensure a stable, high-quality company, whose processes, where applicable, match those of listed companies and thereby support the company's operations. It is also easier for a company to qualify for listing when the ownership strategy has started to move in that direction. Financiers or potential buyers in exit situations will also often evaluate the quality of a company by comparing it to a similar framework applicable to stock market eligibility. Quality companies are more valuable and costs related to their financing are also lower.

Steps to developing a company’s stock market eligibility

1. Please see, for example, the Listing Handbook published by the Foundation for Share Promotion, which describes how to develop a company’s stock market eligibility and perspectives on how to continue in stock market listings. The handbook also provides concrete case examples on how growth companies can prepare for stock market listing.

2. Find people you can talk to who have experience in transforming normal companies into listed companies or the daily routines related to running a listed company. There are several expert companies that carry out assessments on companies regarding their readiness for listing, even if the company’s primary goal is not stock market listing.

3. Another option is to find an experienced co-entrepreneur in your field and embark on the development journey together as co-owners, in which case you will be easier to obtain the necessary capabilities in a more purposeful manner.

4. Strengthen your organisation with expertise that supports the company goal. This could mean, for example, acquiring an experienced CFO and providing support to the company’s management and board.

What areas are development measures typically applied to?

Commonly, initial development measures focus on strengthening a company’s management structures and supplementing its management and board with the right type of and diverse expertise. The board and management must have competence in and previous experience with listed companies.

Targeting a company's financial functions is also a central part of developing stock market eligibility. Companies must be able to efficiently and reliably produce monthly financial information and other detailed information supporting business management, as well as forward-looking forecasting and budgeting data. Achieving this level requires strengthening the economic organisation of the company and developing its processes and information systems.

In addition, attention must be placed on ESG matters. Development measures are commonly most visibly focused on companies’ governance systems, through which their business operations are managed and controlled. However, it is also good to review and develop the E and S aspects of a company, which are highly central in terms of both competitiveness and developing the company's shareholder value.

The strengths and recognition brought by stock market listing have a positive effect on a company's growth, which facilitates recruitment, among other things. Even if your company does not end up being listed, by developing a company that is eligible for stock market listing, you will have created a high-quality company that can grow more easily.

Please do not hesitate to contact us if you need more advice on the topic!