Four Key Consideration Before Commencing An IPO

IPO provides tremendous opportunity for Companies for growth and it is equally important to consider whether the Company is ready for the rigorous process of going public.

The Four Key factors the Companies consider for successful IPOs / Capital Raising are:

Early Preparation: 

• Begin the IPO process early and convert your private limited company into Public limited company, at least 6 months before the IPO.
• Arrange substantial resources to the IPO process and build the quality management team, strong financial and business model, corporate governance and Investors Memorandum that will attract the right investors.
• Pursue pre-IPO transactions to achieve maximum value; specially debt financial and refinancing corporate organization, private placements or business alliances.

Attract Investors:

• Compare the different exit options and the viability for the attracting private equity or private equity exit from the Company
• Identify the most profitable structuring options
• Identify the value it would give to the Company
• Evaluate the financial information requirements for the different options and identify the gaps
• Evaluate the Company’s growth story and support it with current initiatives
• In the case of demerger situation, identify standalone earnings and the parent company impact as well as the timing and costs to achieve the objective

Outperform Your Competitors:

• Have your focus on key financial factors that investors pay significant emphasis, specially to debt equity ratio, earnings per share (EPS) growth, sales growth, return on equity (ROE), portability and earnings before interest, tax, depreciation and amortization (EBITDA) growth.
• Other non-financial factors such as quality of management, execution of corporate strategy, brand strength and operational effectiveness, corporate governance are also important factor that investors pay great attention
• Pay great attention to compelling equity story, backed by a strong growth track record that sets you apart from your competitors, while maximizing value for your company

Address Investor’s Concerns:

• Pay strong attention for enhanced corporate governance by selecting qualified non-executive board members, improving internal controls by appointing qualified audit committee
• Fine tune your internal business operations with great emphasis on working capital management, regulatory risk and rationalizing the business structure
• Management of your current accounting challenges, especially asset valuation impairment, consolidated subsidiary financial statement issues and revenue recognition
• The company should also consider the regulatory of the stock exchanges before filing for an IPO