Ingredients for a successful IPO: Is your organisation ready to go public?

Ingredients for a successful IPO: Is your organisation ready to go public?

In the business world, an initial public offering, or an IPO, is a known term. By definition, an IPO or stock launch is a public offering in which shares of a company are sold to institutional and individual investors. A privately owned corporation becomes a public company through this procedure, referred to as “floating” or “going public. 

IPOs, though meant to take businesses to new heights, improve the offerings and reach, and contribute to the bottom line of your business, don’t work out for all organisations. There are various factors that contribute to making an IPO a good business decision. 

Essentially, success for any firm trying to go public is directly proportional to proper management and the will to expand the business in the market, which is characterised by high volatility and a constantly changing business ecosystem. 

If your business is planning to go public, you are probably aiming to attract investors – and that can be done in a number of ways. According to a recent report by PWC, a firm with stronger growth than the industry average attracts buy-side investors. 

The report states, “Investors look for firms that can meet a number of criteria in order to increase the likelihood of a successful offering and strong performance in the aftermarket.”

Some of the factors that ensure a successful IPO are: 

  1. A sizable and expanding market reach. The first thing that leads an organisation to take the leap of faith and go for an IPO is an evaluation of whether the business addresses a gap and has a product or service that is in high demand. The business model needs to be distinct and the product or service should be appealing—ideally something that has a competitive edge. 
  1. A scope of furthering an already strong revenue stream. If your organisation can claim to have financial standing with large, consistent, and visible revenue growth, you are a good fit for an IPO. Profitable margins and cash flow creation, plus a solid track record of success, are other indications that your organisation is IPO-ready. 
  1. A management team ready to embrace public ownership. If your top management is ready for it, the organisation has financial, operational, and compliance controls that are strong. This ensures that the organisation is well received by the investors. 

An IPO is a difficult process. It is not easy to plan, execute, and manage an IPO. However, it is a known fact that the better a firm prepares, the more productive and cost-effective the process becomes. In the next part of this blog, we will share with you the detailed process of how an organisation can go public, what is the right route, and what to expect. 

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