In the 6-12 months prior to an IPO, you need to do detailed preparatory work to move forward on your IPO value journey.
- Transform the company from private to public and prepare for the IPO.
- Define and incorporate infrastructure and processes.
- Establish new functions to meet capital market regulations and investor expectations.
- Select the right team of external players on the IPO team, including bankers, lawyers, auditors, investor relations and other advisors.
Fine-tune the business plan and IPO fact book.
Executives need to create a long-term business plan pre- and post-IPO with a detailed timeline regarding the operational, financial and strategic initiatives necessary for the company to go public. This plan should provide a clear road map for the company that may be communicated to stakeholders.
Build your external IPO team.
Having a team with the right blend of proven experience and insight is key. Build an external advisory team of professionals with extensive IPO credentials, contacts and industry experience. They must be ready to help you:
- Position your company for a successful IPO
- Transform your business where needed
- Introduce you to the right investors
- Help you sell your story
- Build a valuation for your company that properly reflects its position and potential
Set, start, prepare.
Finding the right window of opportunity is about timing, valuation and being ready to act. It is about setting the target, starting the due diligence and preparing the offering concept.
In some business circles, opportunities relate to location. In the world of IPOs, much hinges on timing:
- Is the market right?
- Is your story fully developed and are you telling it properly?
The window of IPO opportunity can be difficult to predict.
External shocks come suddenly, and capital markets can react to unforeseen international events. For this reason alone, there may never be a perfect time to go public.
Many factors influence the market — political developments, interest rates, inflation and economic forecasts. You have to examine the specifics of the markets you operate in, understand how comparable companies are doing and decide whether investors are receptive to new issuances in your sector.
Factors that affect IPO timing
Craft your equity story and valuation framework based on investor feedback.
An important part of preparing for an IPO is your company’s equity story. This must be supported by historical financial information to demonstrate the trends underpinning it and management’s business plan.
When the equity story is established, you should decide which KPIs to measure and monitor. These decisions should be reflected in your company’s financial reporting in annual and interim accounts, as well as in investor presentations and other communications to the market.
The bottom line: your IPO valuation will be driven by market conditions, your equity story and investor confidence in your management team.Ready for Phase 3?