Is
Your Company Ready to Go Public?
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The market can be a fickle place.
And there are no hard and fast rules about when to enter the
public arena. But timing can be an important consideration
in the success of your IPO. Obviously, if you are serious
about taking your company public, you should hire a professional
firm to advise you. However, before spending the time and
resources to engage a professional advisor you should carefully
consider the following points:
1. Why will your company appeal
to investors?
The ultimate success of your IPO
will be determined a number of different factors - not all
of which are under your control. However, the success of your
IPO will depend primarily on investor perception. Investors
will be making a bet on your ability to deliver a steady and
growing stream of profits. If they believe that you are capable
of delivering in a big way, they will demonstrate that confidence
by taking an investment risk on your company. Investor perception,
in turn, will be defined by several things. The easiest way
to convince investors is to come to the table with a track
record of success. However, even if your historic performance
does not instill confidence, all is not necessarily lost.
History has shown that investors may still be willing to invest
heavily in an idea that has not been fully exploited, providing
that they have confidence in the business plan and the management
team. Investors will typically be looking for good answers
to the following questions:
a. Do you have a compelling
business plan?
b. Do you have a history of
high growth in revenues and earnings?
c. Are you positioned to
assume a leadership role in your industry?
d. How large is the market
for your product or service?
e. Do you have an experienced
management team?
2. How robust is the market for
IPO's?
Even a great company with a terrific
history and a fail-safe business plan can potentially lose
millions of dollars by going public at the wrong time. If
investor sentiment has turned bearish, or if overall market
conditions are not ideal for an IPO, your IPO may not be as
well-received - or as well funded - as it could have been.
You would do well to remember that you only have one chance
to do an Initial Public Offering. A strategic entry into the
marketplace will be critical to your success.
What
Will an IPO Cost?
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