Many international companies have withdrawn their cross-border list of US stock exchanges over the past few years, but few have been based in Italy. 75-year-old industrial companies like Stevanato Group were 75-year-old industrial companies like Pharma, Biotech, Life Sciences Industries' manufacturers of glass vials, syringes and other products.
Stevanato was published on the New York Stock Exchange in July 2021 and raised $672 million. The CFO says the PADUA-based company built the infrastructure, assembled talent and documentation, and refined the process six months before the IPO.
As many private companies wait to list on the wings (although recent market slump may curb hopes of an imminent revival), Dal Lago shared his thoughts on how to develop discipline and attention to detail and maintain public demands.
Which aspect of the IPO process has been smoother than expected?
Our experience was full of twists and turns, such as breaking out of our comfort zone and choosing the US market over the open market in its home country. The IPO takes up to nine months to prepare, but market conditions have made it easier than planned.
Despite the challenges, certain aspects went smoother than expected. For example, the development of registered documents, investor presentations and other materials proceeded efficiently thanks to strong cooperation with internal stakeholders, strong auditors, bankers and legal advisors.
We were fortunate to taste the board members who have experience with important US public companies that helped us navigate the process. The cross-collaboration and expertise across the team helped us identify and validate every part of our operations, statistics and financial data. It was important to the quality and reliability of the materials.
However, unexpected challenges required creative problem solving. One notable hurdle was the level of detail needed before the prospectus landed on the SEC desk. We believe that all statistics related to financial, customer data, or market positioning are supported by concrete evidence. Even the slightest detail was verified and cross-referenced. You cannot underestimate the level of discipline.
This process underscored the importance of preparing governance and operational infrastructure ahead of time, including internal audits, financial standards integration, SEC reporting, investor relations and legal departments.
How about roadshow? What was that experience like?
Though virtually due to the pandemic, the investor meeting schedule has been extremely tight. Management teams should expect 10-12 meetings per day. You need stamina and the ability to deliver consistent messages and stories. And powerful narratives must be supported by data and KPIs that resonate with investors.
The conference wasn't just about sharing the 75-year journey of an Italian company rooted in glass manufacturing, which has evolved into a key player in the pharmaceutical supply chain. It was also about showing us where we would fit within the broader market, how we compared it to our industry peers, and how we could benefit from the secular tailwinds.
Establishing itself as a high value solution provider that is only useful for the pharmaceutical industry has been a turning point to gaining investors' trust. Our decision to list in the US was heavily influenced by our closest US-based peers, allowing us to compare directly to investors.
Startups often cite public costs as one of the drawbacks of listings. How did you approach planning and managing the one-time, ongoing costs of being a public company?
One of the most important steps we took early was assessing the capabilities of our internal teams. By identifying existing strengths, we determined where we could rely on internal resources and where external expertise was needed.
For example, we can marshall a lot of the data preparation within the company, but we have identified areas of expertise where we had to rely on external advisors first, but we had to define the path to build our internal team. This initial assessment helped me balance my own costs and long-term success.
In addition to thinking about talent, we evaluated areas where efficiency can be increased. This includes ongoing training for SEC filing tools, SOX compliance planning, investment relationships, and internal teams.
Another cost that stands out is directors and officer insurance. The sticker shocks we experienced are important and reflect the risk that they are newly published in highly regulated industries. This is an area where CFOs need to be extremely diligent as costs vary greatly depending on risk assessment, the company's industry, and whether they are considered a growth company.
Hindsight could have helped us better manage expectations and negotiate more effectively by understanding more robustly the factors that influence these costs earlier in the process.
How has your internal functions evolved to meet the compliance requirements of the US List?
The transition to a public company has significantly changed internal operations, particularly in key areas such as SEC Reporting, SOX Compliance and investor relations. These features required gradual evolution to meet the new demands of the lives of public companies.
Our long-term goal was to build a strong internal team that could efficiently and independently manage these responsibilities. To identify top talent, we reached out to a network of US board members to find individuals with experience in robust public companies, especially those who understood the nuances of SEC filing and compliance.
The shift from private to public company reporting requirements meant new processes and areas. The level of transparency and the rhythm of reporting were dramatically different.
How did the company deal with Sarbanes Oxley compliance? Do you have any advice for other CFOs?
We took a structured approach to socks and started with a top-down review of all existing processes to identify gaps and weaknesses. From there, process control and mitigation strategies were implemented to ensure compliance. We defined roadmap, implemented structures, and identified individuals who assumed ownership of the required steps. External support from experienced auditing companies was extremely important.
SOX compliance is a journey, not a one-time process implementation. This process requires the internal audit team to continually document, evaluate, refine and ensure sustained compliance with all processes across locations.
You can't emphasize enough how much time, effort, and resources you can get into the socks. To ensure that an organization meets many control requirements, it needs to manage complex change management processes, including increased discipline, more rigorous processes, and expanded compliance and training programs. CFOs should explain the need to train and adapt their corporate culture accordingly.
