Top five tips for a successful IPO
- Start with strong IPO leadership
- Support the effort with sound project management
- Perform a thorough IPO readiness assessment
- Build a robust finance organization
- Think of a sustainable process
Start with strong IPO leadership
Ensure that your IPO team has a strong leader in place. In most companies, this role is assigned to the chief financial officer (“CFO”), sometimes head of business development or corporate finance. For larger or more complex IPOs, an IPO steering committee is usually formed. A strong IPO leader should be clearly identified as he becomes the point of contact, both internally and externally, and will drive the whole process, achieve milestones, liaise with stakeholders, and take critical decisions.
Support the effort with sound project management
Success depends on identifying issues and monitoring progress through effective project management. Without this, one part of the organization might not know what another is doing. Successful IPOs use appropriate resources to support the IPO leader to build the plan, monitor progress, identify issues and keep the process on track. IPO process often leads to increased workload. External resources may be considered to carry out day-to-day tasks or to perform specialized functions.
Perform a thorough IPO readiness assessment
A robust IPO readiness assessment is the first step in a successful IPO. It is vital to identify big-picture issues and prevent surprises later. The assessment, in the form of a questionnaire, will help to identify key issues and gaps to be remediated. At the end of the readiness assessment, a company will have a clear roadmap of how to get there, with recommendations and workstreams prioritized, responsibilities assigned and a timetable for remediation. The readiness assessment therefore becomes a starting point for the company’s transformation.
Build a robust finance organization
Getting the right finance organization, with the right capabilities to deliver quality financial reporting at the right time, is an important factor in creating a successful IPO. We recommend a company to start acting like a public company at least one year in advance before filing its registration statement, focusing on reducing monthly financial closing process to a reasonable period and preparing quarterly financial information with a level of detail and accuracy of a would-be public company. It is also critical to develop a strong Financial Planning and Analysis function to accurately forecast earnings, track against guidance and deliver detailed projections needed for IPO valuation exercise. The first few quarters of life as a public company are critical. Inability to submit the required financial reports to regulators will be damaging to shareholder value and can compromise credibility. It is therefore important to build a strong finance organization with a repeatable process before getting in the spotlight.
Think of a sustainable process
After the IPO kick-off meeting, the organization and all its advisors have their hands full with the offering document, meetings with bankers, the registration statement process, investor slides and roadshow materials. Companies tend to place less focus on building a sustainable process (e.g. investor relations, corporate governance, audit committees, internal control, legal and tax). Once listed, a company will need to address ongoing compliance and regulatory requirements and will require staging in a carefully controlled manner to ensure each element is ready.
The key to a successful IPO is being consistent throughout—solid economics, strong fundamentals and a well-prepared equity story that is easily understood. Although the IPO market is beyond control, companies that envision an IPO in their future can start now and give themselves the best possible chance for success when the markets open. As the saying goes, “A plan to fail is to fail to plan”
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