Maximizing your IPO valuation with competitive advantage

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Session recap

Going public the right way, for the right reasons

What’s the key to driving valuation? During the Forum’s “Maximizing your IPO valuation with competitive advantage” discussion, each panelist agreed: start early, be consistent and don’t rush.

Start early. Preparation is critical, according to Randy Fouch, Chairman & CEO of Laredo Petroleum Holdings, Inc. “While you can do it at the last minute,” he said, “you then have to transform your habits and it will take you at least a year to learn how to govern.” Daniel J. Oh, President & CEO of Renewable Energy Group, Inc., added, “Build the business as a public company, and [make] the decision to take it public a separate issue. There are a lot of tradeoffs, but you have to think about it.”

Be consistent. That’s the advice Deepak Sindwani, Partner at Bain Capital Ventures, shared. “Be extremely sure that you’re confident in your own numbers,” he said. Be consistent and predictable in both the business model and revenue, he advised, “that’s really important to the Street.” Understanding the motivations, concerns and desires from your core constituents, including your investors, bankers and Wall Street, will help you make good decisions and tell the right story, said James Markham, Americas Tax Leader – Strategic Growth Markets, Ernst & Young. “You want to make sure that the story you’re telling is one you can actually perform on,” added Fouch. “As a private company, underperforming for a quarter is not a big deal, but as a public company it’s bad news.”

Go public for the right reasons — don’t rush. “Be careful that the goal isn’t to become the CEO of a public company,” Oh cautioned, advising that going public because it’s “cool,” is not a good reason for an IPO. And Fouch spoke from experience on taking his time. Though Laredo is his fourth company, it’s the first one he’s taken public. Before Laredo, “we thought the best thing for our stakeholders was to see if someone would pay us what the company was worth. They did,” he recalled.

“There are plenty of benefits of going public – but make sure you’re ready,” Sindwani noted, “Don’t let all the extraneous stuff get in the way. Don’t rush.

Speakers:

James Markham photo

James Markham
Americas Tax Leader - Strategic Growth Markets
Ernst & Young LLP

Daniel J. Oh photo

Daniel J. Oh
President & CEO
Renewable Energy Group, Inc.

Randy A.  Foutch photo

Randy A. Foutch
Chairman & CEO
Laredo Petroleum Holdings, Inc.

Deepak Sindwani photo

Deepak Sindwani
Partner
Bain Capital Ventures

Moderator:

Mike Herrinton photo

Mike Herrinton
Americas Risk Leader
Ernst & Young LLP