With interest rates already low in many of the world’s biggest economies – and in the case of Europe below negative – central banks have little room left to lean on monetary policy to help soften the blow of the virus and stimulate the economy.
Instead, fiscal spending will likely serve as an immediate remedy to help stem near-term losses with targeted spending defined by each country’s immediate needs.
The extraordinary set of circumstances facing companies today means that for many with the ambition to list in 2020, their IPO calendar will wholly depend on market conditions, and how they can manage their businesses in this current environment. For prospective IPO candidates choosing to hold out until sentiment improves, there are a number of steps that can be taken during this period of uncertainty to get their companies in the best shape possible before going to market.
This bout of volatility is an ideal time for companies to assess their business models. Companies can look at real-time worst-case scenarios and judge if their existing business models could withstand the same pressures facing public companies today.
Part of this assessment should concentrate on organizations’ capital expenditure, cash flow needs and human resources structure. Companies that take the necessary steps to spot any existing weaknesses will have more time to fix the issues and re-define their business models, thereby attracting greater investor appetite when the time is right.
While uncertainty reigns, companies must not lose sight of their ultimate goals and continue to focus on improving the creative foundation of their companies – and their underlying business models. Ultimately, this will help to propel their company’s growth and value in the future.
To get more insight into the steps companies need to take to maximize their chances of IPO success, download our Guide to Going Public (pdf).