In Finland, lately there’s been talk about costs of stock market life. I agree with many pundits that listing in Finland is far too expensive. The direct costs of actually being listed, however, are in my view relatively modest compared to the benefits of listing; even at the revenue scale of a company like Inderes, around 20 million euros.

Since various rumours circulate about the bureaucratic bogeyman of listed life, I asked our finance team to dig up all of Inderes’ costs related to being listed. I’m presenting the results here at a total level. Our most direct point of comparison is primarily other First North companies of a similar size. For main list companies with market caps in the hundreds of millions, costs are in a very different league. Many of the costs of being listed are directly or indirectly tied to a company’s market cap and listing choice (main list or First North).

Inderes is listed on Nasdaq Helsinki’s First North list, with a current market cap of around 30 million euros. We operate in four countries, have 120 employees, annual revenue of 20 million euros, and apply FAS accounting. As a product house in investor communications, we invest relatively heavily in investor communications for our size. So, some things could be done at lower cost. A zombie company running its listed status on autopilot saves a few tens of thousands of euros but gets nothing out of being listed.

Direct costs of being listed

The largest portion of costs consists of the following items, in no particular order: the shareholder register (Euroclear), the exchange’s annual fee, the Certified Advisor (mandatory for First North companies) and analyst services. Smaller costs include dividend payment, the supervisory fee, an insider management tool, and other incidental expenses. Together, these add up to an annual bill of 113,499 euros.

We also “purchase” the following services from ourselves: an investor website with full maintenance, event production and webcast for earnings calls, execution of a hybrid general meeting, a press release distribution system, and outsourcing of statutory IR processes. Adding these at list prices: 68,680 euros per year. The total bill comes to 182,179 euros.

As a sanity check, I sent a round of messages to a few stock market colleagues asking how much they estimate their own costs to be. Among First North companies I’m getting answers in the same ballpark; for main list companies with market caps in the hundreds of millions, costs easily start running twice as high.

Indirect costs — structure and discipline, or pointless bureaucracy?

What about the indirect costs of listed life? Could we run our admin team with lighter resources if we weren’t listed? A quick question to our CFO and legal counsel. The answer is no, the team couldn’t be leaned out. Inderes runs finance and legal almost entirely on internal resources, with a team of around six full-time people. The work is admittedly more demanding and the team’s responsibilities are greater, which presumably also pushes salaries higher in listed companies. In my own experience, listed life has brought a welcome professionalism and structure to the company’s financial management.

The board of directors needs to be a notch higher in caliber, and board fees are higher than in unlisted companies. We have a six-member board, all with strong CVs and many with extensive listed company experience. If we were unlisted, we could theoretically run our board on paper or as a founders’ old boys’ club at no cost. I don’t think it’s justified to count this as a listed company cost, though, since it would hardly lead to quality governance. As a listed company, the pull in attracting strong board candidates has been surprisingly powerful.

What about the time spent by the CEO and CFO? Preparing financial reporting, ensuring governance structures, managing the company’s financing arrangements, communicating strategy and financial development to various stakeholders and especially shareholders — all of this takes time. In my world, these are things the CEO and CFO should be handling regardless of whether the company is listed or not.

A good year before Inderes listed, the company’s administrative structures were on a very thin foundation and creaking at the seams — we didn’t even have a CFO. The focus was on growth and client work, but the lack of structure was starting to become a bottleneck for growth. The decision to list forced us to get in place those important administrative structures that the company should have sorted out anyway — if we wanted to grow in a sustainable way. And being listed forces you to keep them in order. I’ll admit that some aspects of listed life add bureaucracy, and the processes around managing inside information are not only nerve-wracking but often unclear. On balance, though, the experience is clearly on the positive side.