Planning To Take Your Business Public? Here Are 5 Things To Keep In Mind

As a business leader, there might come a time when you must decide on whether you should take your company public or not. Going public might seem tempting, but it comes with a myriad of trials and tribulations that you must overcome. These challenges might seem daunting but are a necessary burden in the road towards transitioning your company from private to public. With that in mind, if you’re planning to take your business public, here are five things that you need to keep in mind. 

Determine – How Beneficial Is It To Go Public?

The first step in the process should always be assess whether it’s even worth going public. What are some of the advantages of going public, you might wonder. Here are some to consider:

·       Going public can give you the ability to inject fresh capital through the sale of stocks.

·       Going public is a good way to attract potential investors who otherwise wouldn’t invest in a private company.

·       It generally opens up the door for future financing.

On the other hand, there are disadvantages to going public as well, such as :

·       It is a time-consuming process.

·       A public company is always under the scrutiny of public market investors, which limits autonomy.

·       A public company also needs to be more transparent.

·       It will affect your company’s culture and vision.

There are many more advantages and disadvantages when it comes to going public vs staying private. It is up to you as the business leader to weigh the options and decide whether the transition has any value to you as a company. 

Do Your Due Diligence And Assess Everything

Going public is not an easy task. It is a significant step that will require a lot of careful planning and preparation. This includes a thorough diligence of everything,.including financials, operational, legal etc. Legal issues can be a significant hindrance to a successful IPO. Even if you don’t have any legal issues now, you must ensure that there aren’t any in the future as well. Same with financials and company operations. You must also be well aware of the market conditions as you go public.

The success of the IPO process will depend on many things like current market trends and investor sentiments. Furthermore, you should be fully aware of all the rules and regulations there are related to a private company going public. This can seem like a daunting task, but if you start planning early, keep a checklist, and involve experts where needed, it should be a smooth sail.

Get Your Financials In Order.

The entire process is time consuming. And for a business, it means that it is going to cost a lot of money. Moreover, you will require a comprehensive review of your existing finances and will have to report your financial operations to the right authorities every step of the way. Investors will also want to determine the health of your business, which will require them to look at the relevant metrics and assess your current standings, as well as your potential earnings in the future. All of this means that your financials need to be in order, they need to be accurate, and well organized so that it doesn’t hinder the IPO process. 

Reassess Your Company’s Mission And Culture

A company’s identity is reflected in its mission, vision, and culture. One thing to consider when going public will be how it will affect your company’s culture and vision. You must not only ask yourself whether going public aligns with your company’s vision but must also be ready to face the impact it might have on the company itself. Aligning the IPO process with your company’s culture can be challenging. There’s two ways of going about this process.

You must either be ready to stay committed to your values. This includes communicating your values clearly and being transparent so that investors know what they’re getting into. Or you re-evaluate your culture and vision and adjust as needed to keep up with the changing times. This includes updating company policies to ensure they not only keep up with laws and regulations, but also with the flurry of new investors.

Both will require time. So, if you’re planning on going public and are planning on sticking to either one of these strategies, you must start preparing well in advance. Start acting like a public company before you even start the IPO process. This way, your company will have adapted properly to the new changes before heading in this new direction.

Choose The Right Team Members.

For everything that is needed in this process, you need to ensure that you have the right team of external professionals backing you up. They are the ones who are going to guide you through the entire process.

These professionals include underwriters, auditors, accountants, attorneys etc. Underwriters are probably the most important people when going public as they are the ones who can guide you regarding the IPO process, and understand the market feedback on your company.

From pricing shares to managing the process of going public, the underwriting team that you partner with will be the one that deals with all of it. Similarly, an accountant to handle all your finances and an external auditor to audit your financials is necessary along the whole process. A lawyer will help you keep with the law and regulations. This is why choosing the right team of external professionals that you can put your faith in is key.

Concluding Thoughts

Going public is a daunting task and that is to be expected. It is a significant step for your company and will require loads of preparation and planning. Even before you plan on going public, you must ask yourself whether it is even beneficial to do so.

From re-evaluating and investigating every aspect of your business to thoroughly researching the market, there are a lot of steps in the process. Having the right team to support and guide you along the way is a must. Keeping in mind the five points mentioned in this post might help make the process easier.