An initial public offering or an IPO is a significant event which comes during the growth phase of a company. Everyone company wants to have this event successful because the future of the company is based on the success of the event or else the situation of trade-off will arise.
Various key factors help in successful are as follows:
- Proper planning is necessary. The critical points for planning are;-
- Calculations must be done before the initial public offer to know the effects of IPOs transactions. On the basis of the calculation, you need to derive a proper reasonable and suitable stock price
- You must develop an appropriate strategic plan and preparations for performing actions
- Choosing a right bank is necessary .proper bank is essential for successful IPOs. The smooth functioning of the bank is required. Performing transactions should not be a headache.
- The road show is a way of advertisement that every company should take part in. Company’s details should be conveying in that show. The message must contain realistic information. Also, it must be presented in an easy way for the public. It must attract the public. Extra advertisement can also create a problem. Investor sees the working of the company, not the advertisement.
- Always create a backup plan or alternate plan ready if one does not work. Suppose you can keep in contact with the private equity firm to invest in your company. The other method is to sell your stock in the m&a market, joint ventures and alliances. If you sell 25-50% first day from its IPOs, keep the plan ready what you have to the next day. Your every step at that time must be prepared.
- Spend time with investors and make them familiar with our company. You need to impress them with your plans. You have to show them the bright future for the company. Promises to shareholders must be kept, and time-to-time information must be provided to the shareholder.
- The balance sheet must be checked and made so impressive that it will attract investors to your company.
- Time: – you must start work early. Because it is a big event, preparation needs a considerable amount of time. There come many changes as per the conditions going in the market.
- A proper set up of the team must be kept ready for successful IPOs. The team members include advisers, underwriter, CFO, auditor, attorney, cs and many more. Let us discuss them in detail:-
- CFO: – he handles the financial matters of IPOs. He is the one to build the strategy financially and coordinate it with another person. Cfo is generally titled as the primary liaison with Wall Street in the aftermarket. Good CFO is required for a successful initial public offering. Cfo is there on board. On the other hand, if you do not have it, you need to hire a CFO before one year you plan initial public offering, as he will build the healthy environment for IPOs and make a proper plan. Cfo is a whole and sole of marketing in IPOs.
- CEO, i.e. the Chief Executive Officer of the company lays an essential role in an initial public offering. He keeps the vision over the work and the plan for IPOs. Also, it makes a proper strategy. He or she is the one to maintain public relation with investors. He is a significant member of the team that is working for a successful initial public offering.
- Advisory team: – it is the one who will look after for all the regulations and rule, he will advise for all legal matters. The team cannot go on the wrong path in his or her presence. He stops the wastage of finance and provides the best suggestion for that too. There should be built a separate advisory team for an initial public offering. Generally, the advisory team includes board of directors, legal counsellor, independent auditors etc. this is the essential members we will discuss them in detail. The other members are
- Internal audit and internal controls
- Investor relations
- Tax and compensation structuring
- Sec filing preparation and electronic submissions
- Equity tracking and valuation
- Transaction management and strategy
- The board of directors: – they work under the advisory team. Other than that, it provides confidence. They should conduct the meeting time to time for coordinating the work. Also, keep an update of the work because the event of an initial public offering will be one of the most significant events.
- Underwriters and analysts: – underwriters are the one who performs the maximum sale out of stock and sometimes takes the risk of purchasing the remaining stock. He is the cable to connect public and company. Appointing underwriters to help to reduce the risk and have an assured for 100% successful initial public offering. On the other hand, the analyst maintains and look after the buy-side and sell-side. He performs the results for this.
- Independent auditors: he makes the report and his reports give confidence to the investors that the company is performing legal work and account of the company is well managed. He checks that whether the information is shown to the public is true or not in the form of balance sheet etc. As the procedure for appointing independent auditor is long. As he is not from the internal management of the company. You must apply for him or her earlier only.
- Last but not the least legal counsellor:- legal counsellor looks after the ways for proper registration and performs the function for handling the legal matters during the event of the initial public offering.
In this way, they all together form an advisory team performing there individual job that gives rise to a successful initial public offering. Each has its importance in the team. And this team is the strong strength for the company during the initial public offering event.
We have discussed almost every point that is important to make a successful initial public offering. Other than this the factors depend is of human nature of the company like hard work, dedication to the works, loyalty etc. For successful IPOs company must look after this all points. The initial public offering is a big event, and if it is successful, it changes the lookout of company and company goes at the height of success.