Roadmaps for Successful IPO's

We take a look at how IPOs can be successfully negotiated


There aren’t many decisions that affect a company more than its choice to go public. Fueled by the desire to raise capital and drive growth, a company’s initial public offering can often make or break its long-term future.

The promise of deeper sources of capital is something that aspiring multinationals can rarely resist, but with major corporations like Dell opting to revert back to its private status after years of being traded publically, there must be something in it.

Fair enough, Dell’s decision to go private was not down to any strategy that they had willingly opposed on themselves, but it shows that being a private company has its advantages, even if the majority of the world’s most successful companies are publically traded.

An initial public offering is more than a ‘step’; it’s a transformational event that redefines a company. Due to this, it’s a difficult process to complete smoothly, but there are nevertheless measures that can be incorporated to allay certain fears that going/being public will be too much to handle.

The common logic behind the decision to go public is that a company can’t raise the required capital to push it onto the next level, but that sentiment alone will not be enough to attract investors.

If you put yourself in the shoes of an investment banker, a company that has experienced marginal or inconsistent growth might be deemed a risk, especially in industries that are more cut throat than normal. This means that if you’re serious about your IPO you need to be experiencing growth that is far above the industry average.

This can be achieved through a number of different avenues, but most commonly it requires an experienced management team that knows what it takes to make an IPO successful. Preferably they will have been through the process before and know the imperativeness of a well-thought-out business plan that makes reference to all of the problems that the business might face throughout the IPO process. It goes without saying that the company will be strong financially, and as mentioned before, experiencing growth well beyond the industry average.

It’s also essential that you comply with all the necessary financial statements commissions like the ‘Securities and Exchange Commission’ and have the capability to deliver accurate reports on a regular basis. If this isn’t the case, there will be a number of hurdles put before the company that will make the IPO far more complicated.

Management must also invest considerable time in choosing which stock market is most suited to them. Stock markets have different entry requirements and it is important that the chosen market is picked and approached as soon as possible to guarantee that IPO process is as smooth and successful as possible.

Above all, the roadmap to a successful IPO is made possible by a committed management team and a product that has its own unique competitive advantages. Don’t dive head first in your IPO, make sure your company is ready and that more importantly; the market is ready for you.

Fpa4 cover copy

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FP&A Innovation, Issue 4