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Most entrepreneurs dream of the day they can take their company public. But it’s not a decision that can be rushed into lightly. A well-planned strategy will help you navigate through the lengthy IPO process and ensure your eventual success in going public — and, ultimately, growing financially.
As a capital investor, investment banker and entrepreneur, I know firsthand what it takes to navigate the fluctuating road toward becoming a public company. Here are five high-level strategies every business leader should consider when preparing for an IPO.
Your team matters
Throughout the IPO process, you and your entire team will be under the microscope — so make sure you hold everybody to the highest ethical and legal standards during the review. The public will generally be focused on your management team, so invest in leadership that’s impressive and devoted to the company long-term. You’ll also need to ensure you have a strong board of directors.
As you prepare for the lengthy IPO process, you’ll want to hire attorneys whom you trust and who are prepared to work with you for years to come. If you constantly have to change legal teams or onboard new attorneys constantly, it will slow down or even interfere with your IPO process. Finally, prepare to work with auditors and, even more importantly, underwriters — these consultants are critical for the success of your IPO (more on them below).
Start acting like a public company before you are one
One of the best pieces of advice I can offer to any company preparing for the IPO process is to start acting like a public company well in advance. This will not only set you on the right foot for when you are, at last, a public company, but it will also make many aspects of the IPO process simpler, as a lot of scrutiny is coming your way.
Make sure your company’s organizational structure is firmly in place, from HR to management to cybersecurity. Keep records of everything; if you don’t already, start generating monthly and quarterly financial statements. Not only will you have these documents on hand the moment they’re needed, but a high standard of operations will impress potential underwriters and investors — it’s an effective way to show you’re taking this process seriously.
Related: How to Get Your Business IPO Ready
Settle in for the long haul
The IPO process can take years. Every aspect of the process, from putting together your team to assembling underwriters and registering with the SEC, takes months. If you are positive that you want to go public, be prepared for this slow journey — and, even better, figure out how best to utilize the slow periods between the crucial moments.
For instance, you’ll want to focus internal efforts on marketing, especially as you wait for your registration to go through. Your team, including your underwriters, should be focused on testing the waters with your soon-to-be-public company. You can hold a “roadshow” with investors, building relationships and answering questions in a similar way to how you will once you’re public. This marketing period is crucial to investor relationships, and you’ll also want to work closely with your legal team to ensure you’re adhering to SEC guidelines.
Related: How to Lead a Post-IPO Company
Trust your underwriters
Your lead underwriter and your underwriting team are of critical importance to your IPO. You want to select a team with ample industry experience that you trust. Their reputation and level of experience will be vital in determining your investors’ trust.
When selecting your trading market and pricing your stock, you’ll want to lean on your underwriter for guidance. They have the expertise to make an initial offering that will be successful — and while you may judge it differently yourself, you don’t want to have your initial offer rejected, so trust your team to make the correct decision and don’t micromanage. Underwriters will also be heavily involved in the marketing “roadshow” with investors and many other aspects of the entire IPO process. A strong underwriting team is one of your most invaluable resources.
It’s all about timing
As you already know, markets constantly fluctuate, and paying attention to the IPO market as you prepare to go public is crucial. Although it may feel frustrating to hold back once your company has checked every box and is ready to close the IPO process, biding your time for the right moment can make or break your early years as a public company.
If your industry is struggling in the public market or big headlines are dominating the media landscape that could drown out the news of your launch, you’ll likely want to hold off for a better time to enter the market. Conversely, there may be a time when the market is perfect, but your company’s internal documents or affairs aren’t entirely up to speed — so don’t risk having your IPO rejected by jumping into the game too early.
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