Getting Your Company IPO Ready

It’s a real turning point for organizations that decide to go the IPO route to open paths to capital. But there are multiple ways to go about it, and you must determine the one that’s right for you. Timing is key as well.

There are other aspects of going public that you’re not clear on, including what you can expect afterward. What is clear is that you need a plan that distinguishes you once the deed is done.

Keep reading for what you should know about getting your company IPO ready.

What is an IPO?

An acronym for initial public offering, IPO is the process of offering shares of a private enterprise to the public in a new stock issuance. “Going public” enables organizations to raise capital from public investors. The process is open to startup companies as well as those that have been in business a long time.

Why Do Companies Go Public?

As we say, the step is usually made to raise capital. That capital is commonly used to erase debts or to fund growth initiatives. Organizations also begin selling shares of stock to the public to heighten their public profile or to permit some of those within the company to diversify their holdings or create liquidity. How? By selling all or part of their private shares as part of the IPO.

What’s the Process Like?

Once the decision is made to go public, the organization selects a lead underwriter to assist with the securities registration process and with distribution of the newly public shares. That underwriter then puts together a “syndicate,” an assemblage of broker dealers and investment banks whose charge it is to sell IPO shares to individual and institutional investors.

Getting Ready to Go Public

Just as with endeavors such as making executive compensation plans, preparation is fundamental to the offering’s success. In fact, the extent to which the company is prepared determines how efficient the process will be and how much it will cost. The plan should be executed over one to two years.

Selecting the Appropriate Structure

Whatever structure or process you choose, getting the right one in place is vitally important in terms of driving value and efficiency.

Making the Most of Your IPO’s Value

Yes, you need a story, an equity story that not only will establish a clear vision for your organization, but one that will entice investors. In fact, investment bankers depend on a good equity narrative to fix the company’s marketability and valuation.

Get Ahead of Accounting and Financial Reporting Issues

There will inevitably be some issues with anything from financial statements to compensation and taxation. Just make sure you head them off early so that they don’t interfere with the public launch.

Crafting the Registration Statement

It’s best to have management take the lead in the drafting process since these leaders know their business best. Permitting too much involvement from others could yield a registration statement that is different from management’s perspective.

Still, make sure you have experienced advisors on hand who can help with other aspects of going public. It’s crucial for you to have a “been there, done that” project management team that can help set you up for success.

After the Listing

If there’s one thing that must be underscored, it’s that going public will put your organization in the limelight, and with that comes increased public scrutiny in addition to new obligations. Always keep in mind that public perception directly affects stock value.

In summary, getting your company IPO ready takes deliberate and orderly steps and actions. Just be sure to have an experienced team around you, while making sure that management holds the reins.