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Nasdaq First North Stock Exchange Listing

Nasdaq First North Stock Exchange Listing

Why it Makes Sense to List Your American Company on this European Platform

The Nasdaq stock exchange in New York is extremely popular, with big companies such as Facebook, Youtube and Google all listed there. But many don’t know that there is a Nasdaq stock exchange in Europe called Nasdaq First North. After ten years of quiet transformation, buying local stock exchanges in countries such as Finland, Sweden and Denmark, it is now a major market for new and small companies. There are great benefits to listing your U.S corporation with Nasdaq First North. It could provide you with greater access to investors and could cost less and be done much quicker than listing with the New York Nasdaq. If you are keen to explore such possibilities we have excellent advisors who are experts in this field. Mount Bonnell can show you how it’s done.

Recent years have shown a renewed momentum in the stock market. An IPO can be a route to a wide range of benefits for emerging young companies. At Mount Bonnell Advisors, we’ve seen firsthand the ways in which a stock market listing can build momentum and growth for entrepreneurs – especially those looking to expand into the US. 

In this guide, we’ll talk about the benefits of what we believe is the best option out there for European entrepreneurs – the Nasdaq First North. We’ll show you the steps you need to take to get listed and how Mount Bonnell Advisors can help your business to get an IPO at the Nasdaq within 6-12 months for less than $250,000. 

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What is the Nasdaq First North?  

In 2006, the American Nasdaq acquired the stock exchanges of Copenhagen, Helsinki, and Stockholm and turned them into one market – the Nasdaq First North.

From its inception, Nasdaq First North has been especially interested in emerging young companies and has a fantastic reputation for supporting early growth. It is much less costly to go public on Nasdaq FN as it’s been designed with smaller to medium businesses in mind. As part of the Nasdaq brand, it offers the prestige of listing with them, but with fewer barriers to entry than with the New York Nasdaq or the NYSE.

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What are the Benefits of Going Public on the Nasdaq First North?

If you’re an SME then the Nasdaq First North can be an excellent choice for your public listing. The focus on smaller sized and emerging businesses means that it’s ideal for companies who are in the growth stage or don’t fulfill the requirements of the main market.

By listing with Nasdaq FN your company can also benefit from:

  • A Great Image. Nasdaq has an excellent reputation and the highest recognition value of all the stock exchanges. Although the barriers to entry are lower than in some other areas, they still undertake due diligence and ensure high standards are in place. This means you get the prestige of a listing which also acts as a quality stamp for your business.
  • Speedy Capital Procurement. Many companies raise €2-3 million in new capital and the Initial Public Offering lasts 8-12 weeks.
  • Improved Shareholder Value. For companies listing on the Nasdaq FN, valuations of 15-20 times the amount of operating earnings are typical.
  • An Extremely Cost-Effective Listing. The Nasdaq FN offers the fastest and most cost-effective way to enter the international capital market. Typically, you can expect the listing of your company to cost around €150,000- €250,000 – which is a huge saving compared to the €500,000 it can easily cost for an IPO at the AIM London.

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Benefits of Nasdaq First North Listing for European Entrepreneurs Expanding Into the US       

As you expand your business into the US you might wonder why we believe that a listing on a European exchange is preferable to one based in the US. One of the main reasons is that it is much more complex and expensive to list with platforms like the Nasdaq in New York or the NYSE.

Although the Nasdaq FN is based in Europe it forms part of a global brand, with global recognition, and can offer you several benefits to an IPO for your US expansion:

  • There are no restrictions for American investors. US-based investors can buy shares just like on an American exchange. In fact, the shares of your company are traded using the exchange system of the New York Nasdaq – which gives you excellent access without having to adhere to the tighter entry requirements there.
  • Nasdaq is an American brand which is important for getting your name out there to American investors. If you list on Nasdaq FN you get the benefit of listing with a recognizable US brand, without the headache and cost of more expensive platforms with higher barriers to entry.
  • You’ll get access to a broad pool of investors. You can get access to both European and American investors, increasing brand visibility and drawing from a wider range of potential shareholders.
  • The emphasis on growth and supporting businesses with expansion is ideal for growing companies. There are lighter admission requirements and if you are a company with a shorter history this doesn’t create a barrier to entry.
  • You’ll be required to engage the services of a Certified Advisor when listing. This is an excellent move because the advisor can support you through creating your listing and act as a sponsor for your IPO.

 Nasdaq First North can be a perfect middle ground for a European entrepreneur seeking to expand into the American markets. You get the benefits of an internationally recognized, American brand, while still listing at a European exchange.

And, because the costs and barriers to entry are much lower, it’s a far more accessible option for growing businesses. In fact, many businesses have begun on the Nasdaq First North and used it as a stepping stone to other platforms as they solidify their growth.

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What are the Access Requirements for Nasdaq First North?

One of the big benefits to listing on the Nasdaq First North is that the barriers to entry are not very high, especially when compared to other platforms. For example, a stock exchange prospectus is not mandatory.

To list you must provide:

  • Audited balance sheets.
  • A business concept that is demonstrably sustainable.
  • At least 100 shareholders (many of whom can be friends, family, and other contacts who hold only a few shares each.)
  • The engagement of a Certified Advisor (a Listing Partner) who will support and guide you through the process.

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How Mount Bonnell Advisors can Help You to List Your Company at  Nasdaq First North        

At MBA, our advisors have supported a wide variety of companies around the globe to list at the Nasdaq First North. Typically, the companies we support are medium-sized business from all industries. Together with our partners, we can act as a One-Stop-Shop for your entire listing project.

These are the steps that we help you follow to take your company onto the stock exchange!

#1: Potential Analysis & Preliminary Investigation              

We work with you on an initial consultation where we help to discern whether your company is ready for the IPO. We’ll help you decide which listing strategy is best, how to overcome any challenges and what kind of market capitalization your company can achieve at the Nasdaq FN.

We will then help you with your first approach to the Nasdaq FN to see what their board thinks about your intentions. By the end of this stage, you will know whether your listing will be a go for the stock exchange. Typically this stage of consultation takes around 15-20 hours to achieve.

#2: Foundation of a UK PLC List Holding                    

Mount Bonnell Advisors will support you to maximize your valuation by establishing a “list-holding,” rather than trade your company directly on the stock exchange. To do this we will establish a UK PLC for you.

We ask that you get your tax accountant to draw up an evaluation of your operating business. A DCF (Discounted Cash Flow) analysis will be sufficient.

Then we carry out a non-cash capital increase in the PLC, and you contribute shares to it. Your book value of the PLC should be the same as the DCF analysis as drawn up by your tax accountant.

After this step is complete your operative business will now be a wholly owned subsidiary of the PLC.

#3: Engage a Certified Advisor                          

The Nasdaq First North requires you to have a listing partner who is authorized by them as you go public. This listing partner is known as a Certified Advisor and will ensure that all the listing regulations and guidelines are followed correctly.

The Certified Advisor will also write your “Company Description” or “Admission Document.” This includes all the information about your company and the planned IPO. This document can also be known as other names such as “Offer Memorandum.” You do not need a stock prospectus. Your Company Description is then submitted to and reviewed by the exchange.

#4: Allocation of an ISIN & Certification of the Shares                   

You will need an ISIN – the international equivalent of the WKN, in order for your PLC shares to be electronically traded. In addition, you also need to have the shares certified. During this process, the shares are “dematerialized” and made available to the electronic trading system via CREST and Euroclear. Your existing shareholders will have their shares delivered directly into their bank or stockbroker portfolios.

#5: Your Audit                    

The Nasdaq First North requires that an auditor certifies the balance sheets of the PLC and your operating business (the subsidiary). We ask you to arrange your audit of your operative company and once we have received these we will draw up the consolidated accounts for your PLC and have these audited within the UK.

#6: Visit Copenhagen to Present Your Company to Copenhagen           

Once the first steps are ready, it’s time to go to Copenhagen to present your company to the exchange in person. This step is required because it gives the board and you a chance to get to know one another and for them to get a good impression of you and your business. We will support you during this trip and we will not progress with the trip unless the IPO is already in the bag.

After your successful trip to Copenhagen, you will receive training directly from the exchange to advise you about what to consider and pay attention to as a Public Company.

#7: Your Company Goes Public and Begins Electronic Trading                            

Once you have been successful in presenting your company in Copenhagen, your company will be admitted to the exchange and your shares will be electronically traded.

As a way of celebrating this important milestone, your company will be presented to the public on giant Nasdaq billboards located in the iconic Times Square in New York. This is a wonderful PR opportunity for you as you expand into the US!

#8: Optional Fundraising                        

If you decide after your IPO to use it as a springboard to raise funds, Mount Bonnell Advisors can help! We can organize a roadshow in the US (note – will it be in US or Europe & US?), where you and your company will be introduced to select investors. We draw these investors form our personal network that we have built over a number of years.

Each investor we introduce you to will have already expressed an interest in investing in your company. The amount you raise will, of course, be dependent on the size of your company and your funding needs. However, typically we have helped European businesses raise two million Euros in capital.

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After the Listing

Once your company has been listed it’s time to develop your American venture. You will need to continue to promote your shares and ensure you provide the market with great news about your company. You will also need to keep attracting investors and building on this excellent start to your brand reputation.

If you would like additional support, Mount Bonnell Advisors can take care of investor relations for your company.

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Nasdaq First North Listing Vs. A Reverse Merger via a Shell Company 

It’s quite common for small to medium-sized companies to consider buying a shell company while they are considering listing. One of the reasons for this is that a shell company is already listed, so the reasoning is that by using it you can save time and money. Some entrepreneurs also argue that using a shell company can help avoid certain obstacles they foresee when listing – for example, if the company they want to list hasn’t been active for very long (though the Nasdaq First North is able to consider younger companies for listing.)

While we understand this line of thinking, there are considerable risks and disadvantages of using a shell company. For example, shell companies often have legacy issues, especially if they were previously insolvent companies. Even if there are no remaining liabilities, the shell company often retains a poor image.

Other disadvantages include:

  • Cost of acquisition. Shell companies do not come cheap. They usually cost at least €200,000.
  • Limited Shareholding. In most cases, you can only control 70-80% of the shares of a shell company. The remaining shares stay in circulation, and often in the hands of speculators or gamblers who are hanging onto them so they can sell them at a tidy profit if the company recovers from previous issues.
  • Additional Time Required. To take your company public, it needs to be brought into the shell company first via a reverse merger. This can be a time-consuming and complex process (usually 2-3 months) and can incur high additional costs.

These disadvantages mean that we don’t recommend a shell company as the best option for listing. It can rapidly turn into an expensive endeavor with hidden costs that don’t make the initial advantages worth it.

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Why Choose a UK PLC – Even With Brexit on the Horizon?

Although these are uncertain times with Brexit on the horizon, we believe a UK PLC remains a great option for listing your company.

It has several features that make it an attractive choice, including:

  • Fast Establishment. You can set up a PLC in 48 hours.
  • Complete Acceptance. A PLC is equal to the German AG and other European legal forms. If Brexit does go ahead, the PLC is expected to be treated in a similar way to a Swiss AG or a US-Corporation – so double taxation agreements will apply.
  • Low Share Capital. Only 25% of the share capital must be paid in cash, and the minimum share capital is €60,000.
  • Attractive Corporate Law. English corporate law is relatively liberal, especially compared to other European laws such as the German AG. An example of this is that the company that will be listed can be brought into the PLC as a subsidiary, rather than a merger.
  • Excellent Flexibility. The PLC is very flexible and offers great benefits. The capital increase normally required to go public can be achieved through contributions in kind. Additionally, the capital does not have to include any cash funds and an expert valuation of the contributions is not required.

For these reasons, we think that a PLC is a far more advantageous option as compared to using a shell company.

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What are the Cost and Timeframes For a Listing Project?

Although it’s possible to take a company public on the Nasdaq First North in 3-6 months, our experience tells us that very few companies already have the groundwork in place for such an ambitious timeframe. Realistically, you should expect the process to take 6-12 months, including all the pre-preparation.

The cost of this kind of listing project can be around €150,000 – €250,000 as an initial outlay. If this is beyond your current budget then we would advise that you don’t undertake a listing at this time. Please also note that a listing can be cheaper or considerably more depending on a wide variety of factors.

The guide price of the above includes all costs associated with the project. This includes the costs of all parties (such a Certified Advisor, UK Auditor, Stock Exchange, etc.) but please be aware that you will settle the bills for those services directly, rather than via Mount Bonnell Advisors. This enables you to ensure you have total control and transparency in all your billing costs.

Remember – not all costs are payable immediately. The process does take around 6-12 months and your bills will vary at different times during the listing project which can help to spread the cost.   

For Mount Bonnell Advisors your success is our top priority. We think that our profit should be directly tied to your success at the Nasdaq. That’s why, as part of our fee agreement, we would usually receive a small stake in your company.

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Next Steps to Your Nasdaq First North Listing

If you’d like to take the next steps to listing your company at Nasdaq First North, please book a consultation with Mount Bonnell Advisors. We offer consultation via telephone, Skype or in-person at our London offices.

During the course of this one-hour consultation, you will be able to discuss the most important details of your plan and we will help you to discover whether you are ready to list on the stock exchange now, or whether it would be better to hold fire for another year.

Consultations take place with our skilled and experienced advisors. They last for one hour and the cost is £280, incl. VAT).

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FREQUENTLY ASKED QUESTIONS ABOUT TAXES, COMPANY FORMATION AND RESIDENCY IN THE USA (FAQS)

We’ve compiled over 150 of the most frequent questions and answers (FAQs) on tax, company formation, and residency in the U.S. in our knowledge base. You can visit our knowledge base here.

If you find that your personal questions have not been answered, book a telephone consultation here.

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Need Advice on Taxation, Company Formation, and Residency in the United States?

Starting a business in the U.S. can be both exhilarating and exasperating. There is much to know and even more to learn, and the pace of the information coming at you can be overwhelming.

That’s where Mount Bonnell Advisors come in.

Would you like to live your very own American Dream? At Mount Bonnell, we can guide you through the labyrinth of regulation and red tape and out into the blue skies of a dream come true – the dream of living and working in America.

Whether it’s technical issues around tax or residency, or strategic ones involving business formation and growth, the experienced team at Mount Bonnell Advisors are here to help.

So make that dream a reality by booking a consultation today with Mount Bonnell Advisors. Let the adventure commence!

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