How BME Growth can be the perfect solution for your company’s future: frequently asked questions and key benefits
BME Growth is the stock market par excellence designed for SMEs seeking strategic opportunities for expansion and growth. This market has established itself as an essential tool for companies wishing to make the leap to the stock market, gaining access to new sources of financing that will enable them to remain competitive in an increasingly dynamic environment. Without this support, many companies run the risk of losing market share to better positioned competitors.
Based on our experience advising several companies that have decided to join BME Growth, in this article we will address the frequently asked questions by companies evaluating this option. We will also explore the main reasons why BME Growth can be an excellent alternative for companies seeking to consolidate in their markets and boost their growth through stock market financing.
What is BME Growth?
BME Growth is the specialised stock market of Bolsas y Mercados Españoles (BME) designed specifically to facilitate the listing of small and medium-sized enterprises (SMEs), as well as those in the process of growth or expansion. This market is characterised by offering regulation, costs and processes adapted to the needs and capacities of developing companies, providing more accessible access to the stock market.
BME Growth is designed for companies with high growth potential that have not yet reached the size or resources necessary to be listed on larger markets, such as the continuous market. It is thus positioned as a key platform for companies seeking financing and visibility without compromising their management capacity at an intermediate stage of their development.
What benefits can BME Growth offer my company?
1. Financing
BME Growth offers an ideal platform for financing growing companies through equity. In this way, it provides solidity, flexibility and reduced financial risk. Through this platform, small and medium-sized companies can access a large investment community, both nationally and internationally, and maintain control of the company.
2. Notoriety, prestige and brand image
Being listed on BME Growth gives the company solvency, transparency and prestige. It also reflects its high degree of organisation and control, as well as gaining the confidence of investors. This prestige is also recognised by clients, suppliers and other financial players, which facilitates commercial relations. Listed companies gain greater visibility in the media, which enhances their brand image and complements their marketing strategies, thanks to the constant interest of investors and market analysts.
3. Objective assessment of the company
The price of a company’s shares listed on BME Growth is determined through the interaction between supply and demand. This provides a real, market-adjusted value at all times, which is a valuable reference for the company’s managers in their decision making.
4. Liquidity for shareholders
The high liquidity of the shares of companies listed on BME Growth is one of the main attractions for investors, as they can be easily converted into cash.
What kind of companies are attractive to BME Growth investors?
BME Growth is the ideal market to finance and accelerate the growth of any company with a solid business plan and an attractive expansion project. In this sense, BME Growth brings together companies from various sectors. Many of them are innovation and R&D intensive, such as the technology, biotechnology, healthcare, telecommunications and renewable energy sectors.
What requirements must my company meet to be listed on BME Growth?
Companies must meet the following requirements to be listed on BME Growth:
- Public Limited Company: in order to join BME Growth, the company must be a public limited company and adapt its articles of association to the requirements of this market.
- Administrative body: the administration of the company should be vested in a Board of Directors, which should also appoint an Audit Committee to supervise and control financial reporting.
- Transparency: companies listed on BME Growth must comply with high levels of transparency in management and governing bodies, and must also provide audited half-yearly and annual information.
- External Advisers: the company must appoint a registered adviser to assist with the flotation and during the tenure, as well as engage a liquidity provider to facilitate the trading of the shares.
- Shareholder spread: the listed company must have at least 20 independent shareholders with a stake of less than 5% of the share capital. Shareholders with holdings of less than €10,000 do not count, unless there are more than 500 retail shareholders. In addition, shareholders with holdings of more than €1 million will not be counted beyond that amount for the calculation of the spread.
- Auditing: the company must have at least 24 consecutive months audited or, failing this, provide forecasts for the current and the following financial year.
What are the four stages in the process of joining BME Growth?
1. Planning phase
In this first phase, the entire operation is designed, corporate restructuring operations are carried out to increase the value of the company and the different agents involved in the process are appointed.
2. Preparation phase
In this phase, the necessary corporate resolutions are adopted to comply with the incorporation requirements; a legal and financial review of the company (due diligence) is carried out and the incorporation information document is prepared; and a valuation of the company is carried out.
3. Processing phase
At this stage, the application and the informative document of incorporation are submitted to BME Growth for review and, where appropriate, the pre-exit capital increase round is initiated.
4. Incorporation phase
In this last phase, the capital increase round is closed, the informative document of incorporation to the market is published and the famous bell is rung to start trading.
What agents are involved in a process of joining BME Growth?
- Registered Advisors: specialised professionals who assess the suitability of companies to join BME Growth and assist the company in complying with the incorporation requirements. In particular, they collaborate in the preparation of the Incorporation Information Document.
- Liquidity Providers: stock market intermediaries that facilitate the buying and selling of shares during market sessions, ensuring constant liquidity and reducing price variations unrelated to market trends.
- Agent Bank: provides the necessary technical support for the inclusion of the securities in the Central Book-Entry Register, managed by IBERCLEAR, and for the settlement of the sale or subscription transaction, if applicable.
- Legal and financial advisors: responsible for the preparation of legal and financial reviews of the company (due diligence), as well as advising on the adoption of all corporate resolutions necessary for market incorporation.
- Placement Entity: is responsible for the design and execution of the offer transaction, the solicitation of demand and the allotment and listing of the company’s securities and will generally work in coordination with the Registered Adviser.
- Independent valuator: prior to the exit, the company must provide a valuation by an independent expert in accordance with internationally accepted criteria. The exception is if within the six months prior to the application there has been a placement of shares or a financial transaction that is relevant to determine a first reference price for the commencement of trading in the company’s shares.
- Auditor: as indicated above, for market listing the company must have at least 24 months audited and, once listed, must provide audited half-yearly and annual information.
- Communication Agency: in the exit to BME Growth and in the prior attraction of investment, news communications on events related to the company that have to do with recent successes or future plans play an important role.
What is the market entry information document?
The BME Growth Information Document is a mandatory document that companies wishing to list their shares on the BME Growth market must prepare. It aims to provide clear, detailed and transparent information about the company, its financial situation, business model, growth prospects and other relevant aspects for investors.
This document is key to ensuring transparency in the market and providing investors with all the information necessary to make informed decisions on the purchase of shares in the company to be incorporated into BME Growth.
It is prepared by the company with the assistance of registered counsel and based on information and documentation previously reviewed by legal and financial advisors through due diligence.
How do I determine the exit price of my company’s shares?
Unless a placement of shares or a significant financial transaction has taken place in the six months prior to the application to join BME Growth, the reference price of the shares will be determined by an independent valuation based on internationally accepted criteria. This initial price is fundamental, as it defines the valuation of the company when it debuts on the market and directly affects investor confidence.
A well-judged price attracts a larger investor base, ensures that the company raises the necessary capital to grow and minimises excessive fluctuations in the market. In addition, an appropriate price strengthens the public perception of the company, giving it prestige and stability, key elements for success in future capital increases and solid market performance.
What is the lock-up period?
The lock-up period is a period during which certain shareholders of a company that has been floated on the market cannot sell their shares after listing. This mechanism seeks to stabilise the price of shares after their flotation and to avoid an immediate sell-off that could generate volatility in their value.
In accordance with BME Growth regulations, if the company is less than two years old, the main shareholders, directors and executives must undertake not to sell shares or carry out equivalent transactions within one year of listing. This commitment guarantees stability and confidence for investors during the first months of trading.
What are the costs of joining BME Growth?
The costs of joining BME Growth cover several key elements, such as the fees of the Registered Advisor, who is responsible for guiding the company through the process of going public and ensuring compliance with legal and regulatory requirements. An external audit is also required to certify the financial statements, which is an additional cost. The company will need to have a liquidity provider to facilitate the trading of the shares in the market and, in some cases, an underwriter to manage the placement of the shares.
Another relevant expense is the preparation of the Information Document of Incorporation, which requires an exhaustive review of the company through the corresponding legal and financial due diligence, involving the hiring of specialised lawyers and consultants. In addition, the company will have to assume marketing and communication costs to promote its IPO and organise presentations to investors. Lastly, BME Growth applies an admission fee for the company’s listing on the market.
In total, these costs typically range between 100,000 and 200,000 euros, depending on the size of the company and the complexity of the process, as well as the services required.
At Devesa Abogados, we offer comprehensive advice to guide our clients in complying with the legal and regulatory requirements necessary to join BME Growth. Our team of experts coordinates the recruitment of the key agents and professionals, such as the Registered Advisor, the Liquidity Provider and the Placement Entity, ensuring an efficient and successful process.
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