The US is the largest and deepest capital market in the world with huge pools of capital, depth of investors and understanding of businesses particularly those related to technology and also hosts the most prestigious markets in the world. Listing in the US is therefore attractive and a desirable objective for many companies. Most of the largest, most successful and long lasting businesses, which are household names—be it Sony, Toyota, Samsung from Asia or HDFC Bank, MakeMyTrip.com, Infosys, Wipro etc from around the world—have listed in the US for these reasons.
Here are the challenges in getting listed in the US:
1. It is a rule based market so it’s very important that your organisation starts understanding the rules and adhering to rules as a culture. Written word is important and crucial. So everything needs to be documented and clear. You cannot get away by saying we assumed this was understood. When in doubt, please document.
2. The market is unforgiving of attempts to manage results or delay news and being open. So be prepared to share and share fast, especially negative news. Also engage with investors who will advise you on strategy, board composition, CEO investment and push you to make choices on these.
3. The regulators are sharp and expect timely action in terms of reports, disclosures and will punish immediately of any missteps
4. Be prepared to engage with US lawyers actively and consult them on all key aspects. Engage good high quality firms which have SEC experience. Be prepared for significantly higher costs for maintaining listing in the form of fees to advisors
5. Be prepared to do M&As and be the target of acquirers. Have an open mind.
6. Engage actively with the investor base and ensure that you are available to answer queries clearly and consistently. Remember and document what you say as they will challenge you if you change what you said earlier without a valid explanation. Engage a good quality PR firm.
7. Have a strong board and governance standards rather than just puttinga tick in the box. Be prepared for the board to guide you and in some cases direct you. The board may differ from your views privately and publicly (unlike Indian boards).
8. Ensure that your organisation is well prepared on SOX which means have strong controls, documentation and reviews on a regular basis.
9. Engage with quality firms to do audit, SOX reviews based on skills and experience of professionals
10. Take advantage of the US markets ability to be innovative in terms of financial instruments, classes of shares and other structures.
(Harish HV is a Partner – India Leadership team, Grant Thornton India LLP.)