Road to the North – part 2: Leaping into the Unknown

This is the second part of a blog series following the journey of Witted Megacorp Oy as it explores the possibility of listing on NASDAQ's First North market. The story is told from CEO Harri Sieppi's point of view. Other parts of the series can be found on the Witted blog.

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    Harri Sieppi
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So what kind of a deal is an IPO?

Goddammit, bloody hell, UGH. IPO?! I-P-O, isn't this exactly what I was trying to avoid in the first place? "Don't go to work for a listed company,” I had promised myself. Well, now that I've said that out loud, it didn't help but go and explore this route, even though this seems like a huge, insurmountable block.

The IPO project is really a slew of parallel tracks, all of which contain numerous smaller and larger projects. It easily takes about six months from launch, during which the company goes through Legal Due Diligence, Valuation, Investor Communications, Issuing and projects identified through requests for information. There's easily several partners, we have five. The costs run into hundreds of thousands of euros.

All of this was still unknown to me in early 2021, so I started by going to Google and writing: ”How do you do an IPO?" and " I wonder what that whole IPO thing will cost.

Listing a company.xlsx

February 22. It was a Monday. I caught the Metro to Kaisaniemi. Our board member Juha works at Reaktor, and their office has excellent wall-sized drawing boards. The place is optimal for messing around with a magic marker and brainstorming. We agreed to meet and started working together, the project began as ”Listing a company.xlsx", because real business nerds will do everything on Excel if they can.

We sent a message to NASDAQ asking for background material on First North's rules and a few existing company brochures. Parallel tracks were the main list and First North. We then started to decode these into our Excel as tasks.

We did the first version of the ”IPO Readiness Study” based on the rules of the exchange and colour-coded with traffic lights how we believed we met the requirements. We didn't score a lot of green spots. It was looking more red and yellow. On the other hand, at the same time, there was a perception that the requirements were not impossible to meet. "Totally doable with First North,” we said together.

We crossed out the main list from our options. It felt far too onerous when 99% of the benefits we identified seemed to be realised already with First North. Business is doing well and there are only some demands coming from First North that are not relevant to private but mandatory to public.

Finally, we Googled a list of IPO partners. We collected reference listings, including costs, in one section. Rock 'n' roll and off we went.

Why get listed, what are the pros and cons?

There are plenty of views regarding IPO on online forums. Some of it is quite amateurish, but some of the guides are really good. The Finnish Foundation for Share Promotion's ”IPO Handbook" was a good find, which yielded quite a lot of pros. Cons were found more in conversations and more informal sources, in the ”I kinda feel like" category.

Juha and I decided to approach the issue from the perspective of the company's strategy and compared the pros and cons to it. We were under the impression that listing is a good thing to ensure and implement the company's growth strategy. Ownership dilution, process costs and increasing regulatory requirements went into the cons.

We also used the ”phone a friend" lifeline and, through a banker friend, got their opinion on whether they thought the company should go public. The answer was not "absolutely not", but it was a "no" anyway. From their perspective, the market was quite problematic because of the Covid pandemic and the cost of the IPO burden on the company. Their recommendation was the M&A path in the private sector.

Well goddamn. This took the wind out of my sails. So this was it? I collected the markers in a pencil case and headed home defeated: the post-it note exercise was over, what's next?

Back on the path

If grip on the IPO journey begins to slip, we have to think about where we might go then. I wonder why we're doing this. What makes us and our company tick?

The company has become very important and dear to all of us involved. We don't want to give up that company, heck no! As the founder, I would hope that the company will continue to live long after I am no longer at the helm. I would like it to live ”forever” – or until, quoting Inderes' IPO materials, “the delay of inevitable bankruptcy fails.”

My friend once asked me whether the name of the game was “For Exit" or “ForEver". The answer was super easy to give, this trip is ForEver, we don't want to sell the company to a private investor, it wouldn't make any sense.

Would it be appropriate to return to the path of our IPO dreams after all? A few days went by, as we wondered what these alternatives really were. We don't really need an IPO, it's not necessary for the company's success, but it would help to maintain this high growth rate and would also open the door to inorganic growth for us. We weighed the pros and cons again.

Our main shareholders include Reaktor and the company's operational management. It was important for me to have a discussion based on the alternatives about the ownership strategy and to understand what the owners really wanted. We have strong growth highlighted in the ownership strategy and this choice is fundamentally linked to the means we have at our disposal. The company also has three potential ends it can play with: the IT consultancy end (all software business together), the previous multi-business entity, or the product/SaaS service end, as we have built tools to make this business more efficient.

This forum is one that rarely meets and this makes it difficult to predict what thoughts people will have around the topic. I was particularly interested in the reasons why my friends' companies have never gone public and whether there is some kind of information, some kind of insight, that would be good to share now. I prepared a list of questions and we arranged the meetings. The mental prep I did was like, “veils of secrets open, straight to the deep end, and from there you kick to the surface”.

The meeting went well. The owners wanted to head down the IPO path. We were back on the right track. It was as if, after many setbacks, I had finally won one battle.

The fifth day of March was a Friday. When I left at 2pm heading home to Lauttasaari, I felt extremely bright and good. I said to myself, “we're going to do this, we're going to do this, we're going to do this... how are we going to do this?”. I knew the lead was going to be the IT consulting company, but everything else remained open. This is a leap into the unknown.

Enjoy your weekend, any and all who know how to shut down their brain and jump on the couch at this point, for me that isn’t possible, as my brain is running a mile a minute. The initial horror and surprise had now turned into an absurdly exhilarating challenge. I was on fire.

Most of the group's companies would come along. At this point I didn't know that not everyone would tag along.

The story continues in a couple of weeks. Follow Witted on LinkedIn, Facebook or Twitter, and we'll tip you when a new part comes in. This story is also told as a (Finnish language only, sorry!) podcast, which you can find on podcast services such as Spotify and Apple Podcasts.