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EY's guide to going public - IPO planning phase - EY - Global

EY’s guide to going public

IPO planning phase

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EY - Going public

EY - Going public



12 to 24 months before IPO: market leaders make thorough planning an important first step in their IPO value journey.

Step 1: Preparing for the IPO journey

Going public is not for everyone. The potential pitfalls are numerous and the stakes are high. You must evaluate the benefits and disadvantages of an IPO in the context of shareholder and corporate objective

EY - Preparing for the IPO journey

To determine the feasibility of an IPO, you need to consider your company's fundamentals including:

  • Business model and management capability
  • Growth potential and market size
  • Financial track record
  • Valuation and comparative value
  • Shareholders' objectives
  • Current stage of development in company life cycle
  • Prospects and position within industry
  • Investor base and analyst coverage

Step 2: Keeping your options open

An IPO may be your favored approach to raising capital. But it's important to evaluate all possible transactions that could serve as stepping stones.

Your alternatives may include any combination of the following:

  • Sale to a strategic buyer through the M&A market
  • Sale to a private equity firm
  • Private placement, often as a pre-IPO step
  • Joint ventures and strategic alliances
  • Refinancing to release funds for partial exit

Step 3: Timing the market

Timing is crucial. If timed correctly, you may price your IPO at a time that provides your company with an optimal valuation and will provide your IPO investors with the greatest upside in their investment in the months and years after the IPO.

EY - Timing the market

A useful alternative

The "Locked Box" mechanism, an alternative to the deal completion phase, can speed up and simplify deal completion by:

  • Providing greater certainty over the price that needs to be paid for a target business on completion, which for the seller frees up capital for reinvestment.
  • Removing the need for a post-completion "true-up" process.

You will need to examine the specific markets you operate in, how comparable companies are doing and whether investors are receptive to new issuances in your sector.

Many factors influence the market — political developments, interest rates, inflation and economic forecasts, just to name a few. Underwriters can help to track these changes to anticipate when investors are likely to be receptive to new offerings.


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