Deciding to take a company public is a huge decision, and executing a successful IPO requires a tremendous amount of dedication and hard work. Of course, the reasons a company seeks to go public as well as the timing of the launch will have a significant effect on how things turn out in the end. It is obviously incredibly important to create a solid strategy well in advance and to ensure that all existing and potential problems are identified and rectified as early as possible. Here are five tips to consider to ensure a successful IPO:
Appoint Strong Leadership
The success of any venture is heavily dependent on the strength of those overseeing it. In many cases, the chief financial officer will retain primary responsibility for the creation and implementation of the IPO strategy, but other members of the leadership team will also be involved throughout the process. It is vital that there is a strong leadership team in place, consisting of internal executives, as well as external professionals well versed in the intricacies of completing an IPO.
Prior to diving right into an IPO headfirst, it is important to first test the waters. Specifically, there has to be an analysis of the company’s performance and financial standing, the identification of existing and potential stakeholders, an evaluation of the level of prospective investors’ interest, and an honest assessment of overall readiness in light of all of the factors and circumstances. It is far too common for companies to get ahead of themselves in the process, allowing greed and impatience to displace the reality of the situation.
Make Adjustments Early
One of the main reasons it is so important to conduct an honest assessment of a company’s standing to determine whether an IPO is a feasible option is that it will provide an opportunity to fix things in advance. There are a lot of rules and regulations governing public companies that do not necessarily apply to those that are privately held. As a result, financial and operational matters may have to be changed, which can clearly take time. It is wise to begin to make these adjustments to see if and how the company will fare under the impending paradigm.
Implement a Realistic Strategy and Timeline
A truly successful IPO usually results in a handsome return for the initial owners and the potential for tremendous gains in the early stages as a public entity. Unfortunately, the people involved are often eager to seal the deal, which can cause small but important details to get overlooked. There has to be a clear strategy and realistic timeline put into place from the very beginning, along with well-delineated checklists to ensure that every step is accomplished correctly and in a timely fashion.
Allocate Adequate Resources and Support
Making the transition from the private realm to the public one will affect every aspect of a company. For this reason, it is imperative that the appropriate amount of resources and staff are assigned to help those tasked with overseeing any requisite changes. This can obviously be a costly endeavor, but failing to stay on track or allowing any sort of lapse in communication can prove disastrous to the deal. Thus, it is worthwhile to allocate adequate resources at the outset to help manage and support each phase and ensure appropriate progress.