Pre-Initial Public Offering (Pre-IPO) Advisory Service

Pre-IPO  Market Consulting & Advisory

 

Capital Raised:

When a company decides to go public, one of the primary objectives is to raise capital that will cover its cash requirements for the next 18-24 months, aligning with its projected profitability. Going public also presents an opportunity for the company to optimize its balance sheet by incorporating additional sources of capital, ultimately aiming to reduce the overall corporate cost of capital.

Valuation:

In addition to other factors, management and pre-IPO investors must carefully assess the realistic valuation of the company at the time of the IPO. While it's natural to be reluctant to sell a portion of the company at a discount, growing companies with a clear path to profitability often attract significant interest from IPO investors, resulting in oversubscribed demand. However, in a less robust IPO market, even high-quality companies may need to consider a valuation that appeals to investors. Nevertheless, it is possible to minimize the relative discount compared to competitors' trading values in the public markets, as indicated by metrics such as Enterprise Value to Revenue, Enterprise Value to EBITDA, or Price to Earnings.

Share Price Appreciation:

An important measure of success lies in the growth of share price from the IPO to the current trading price. New investors and management closely monitor the returns achieved between these two points. The key driver of share price appreciation is the management's competence in executing their strategic plan, consistently delivering financial results on a quarterly and annual basis, and ultimately surpassing expectations.

Branding:

Both B2C and B2B companies can leverage the branding opportunities associated with an IPO. Going public reinforces a company's stability and long-term growth potential, as it entails increased transparency through public financial disclosures and a publicly traded stock. This heightened visibility can instill confidence in customers, positioning the company as a trusted and reliable partner, and further enhancing its brand reputation.

Pre-IPO Road Map:

 

The Decision to Go Public:

The need for additional capital doesn't automatically make going public the ideal solution. It's crucial to consider several key questions and keep your specific goals in mind throughout the entire process of going public. By carefully evaluating these factors, you can determine the most appropriate course of action for your company's financial objectives.

 

Preparing for Public Company Status:

Thorough preparation is paramount when it comes to an IPO. The level of readiness your company achieves directly impacts the efficiency and cost-effectiveness of the process. We highly recommend implementing a well-structured plan spanning one to three years to ensure an orderly transition to becoming a public company. By meticulously following this timeline, you can position your company for a successful IPO while minimizing any potential challenges along the way.

 

Maximizing the Value of Your IPO:

At the heart of a successful IPO lies the equity story, which establishes a compelling vision for your organization and serves as a persuasive case for investor interest. The equity story plays a crucial role in determining both the marketability of the company and its valuation, with investment bankers relying on it to assess these factors. By crafting a strong equity story, you can effectively communicate your company's value proposition, driving investor engagement and ultimately maximizing the value of your IPO.

 

Building a Going Public Team:

When assembling a team for the process of going public, it is crucial to seek advisors with a proven track record of success in similar ventures. Look for key individuals, from specialists to staff members, who possess the expertise to assist in preparing essential documents such as the registration statement and sales materials. By enlisting the right professionals who have "been there and done that," you can ensure a smooth and effective transition towards going public.

 

Navigating the IPO Process:

The path to a successful IPO often involves operating as a public company well in advance. By adopting the practices and mindset of a public company beforehand, businesses can set themselves up for success. To navigate this process effectively, it is valuable to enlist the expertise of an experienced project management team. Their knowledge and guidance can help position your company for a smooth and prosperous IPO, maximizing your chances of achieving your goals.

 

Determining Filer Status:

Filer status plays a crucial role in driving reporting requirements throughout the going-public process and the subsequent life as a public company. It is essential to continually assess and reevaluate filer status during the going-public process and on an annual basis for public companies.

 

Structuring Your IPO:

Selecting the appropriate structure for an IPO can yield significant benefits. Regardless of the chosen structure or process, establishing the right company or group structure is vital to enhance value and efficiency.

 

Addressing Common Accounting and Financial Reporting Issues:

Proactively addressing accounting and financial reporting issues, such as financial statements, taxation, compensation, and complex technical accounting matters, well in advance of the registration process is crucial. This ensures that these issues do not become obstacles in the journey of becoming a public company.

 

Preparing the Registration Statement:

Management possesses the deepest understanding of the business and should actively participate in providing direction during the drafting process of the registration statement. Allowing others to draft significant portions may result in a registration statement that diverges from management's perspective.

 

Test the Water Before IPO