How to Ready a Company to Go Public in a Volatile Market

How to Ready a Company to Go Public in a Volatile Market

How to Ready a Company to Go Public in a Volatile Market while a pause in the IPO market due to less-than-ideal marketplace conditions may be frustrating for companies ready to go public, there is no need to panic. Experienced leadership and the right team of professional advisors can help companies stay on track to become IPO-ready.

During periods of high volatility, investors can feel spooked and question their long-term investment strategies. However, a long-term perspective can help investors navigate this uncertainty.

1. Know Your Target Market

Your target market is the group of consumers who will buy your product. Identifying this group will help you determine which advertising platforms to use and what products and services to offer. It will also allow you to craft a message that appeals to their interests and values, which can boost your ROI.

A good starting point when identifying your target market is to look at who already purchases your product or service. This can be done through social media engagement, surveys and other research tools. Existing customers can provide a wealth of information, including age, sex and location, and can help you narrow down your audience.

Another way to know your target market is by looking at the current investor community for your industry. Volatile markets can offer investors a chance to re-acquaint themselves with their portfolios and ensure they are aligned with their investment profiles and risk tolerances. This can be a great opportunity for companies with a strong story and a solid growth track record to gain investor interest.

2. Know Your Company

A primary benefit of becoming a public company is access to the capital markets, which allows companies to raise large amounts of money to grow and expand. As a private company, it may be difficult for businesses to generate enough cash to fund operations and development without borrowing or reinvesting their profits.

In addition, being a publicly traded company also requires that companies disclose information about their financial status to shareholders and investors. Management of a publicly-traded company must often sacrifice control over the business for this privilege, as ownership of shares becomes split between the public and leadership.

In volatile markets, it is common for companies to hide from investors, but this can be a costly mistake. Instead, it’s best to remain visible, attend strategically selected investor conferences and non-deal road shows and continue the conversation about your goals and progress with investors. By keeping your head down and focusing on the fundamentals, you will find that, despite market volatility, investor sentiment can turn quickly.

3. Know Your Financials

The decision to go public can have a tremendous impact on a company. During the IPO process, it’s important that companies have the right partners, resources, and technology tools to ensure that they are able to operate smoothly and efficiently as they transition into a publicly-traded company.

This also includes having the financial statements and internal systems that will allow your business to meet the enhanced reporting, audit, and regulatory standards of a public company. Investors are looking for consistent, reliable financial performance, including forecasting and KPIs that compare well to other comparable public companies.

How to Ready a Company to Go Public in a Volatile Market
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Having the right team in place is also key. This includes qualified, experienced leadership and a team of professionals that can handle the additional workload associated with being a public company. They must prepared to promote the company during its marketing “road show” and to answer questions from investors. In addition, they must be able to meet the reporting and regulatory requirements for significant shareholders, officers, and directors, such as filings and separation of duties under Sarbanes-Oxley (SOX). This includes having a system in place for tracking ownership and transactions.

4. Know Your Options

A company that prepared for an IPO has efficient financial reporting systems, knowledgeable personnel and robust corporate governance practices in place. During a volatile market, these things can still make the difference for companies that have been waiting to go public.

Volatile markets can cause institutional investors to demand a higher return on their investments, which may result in a lower IPO price for the company. In this case, a company might decide to delay its IPO until the market is more stable.

If you have stock options and your company is going public, this is a good time to take a look at your concentrated equity position and consider any redeployment opportunities that could benefit your long-term goals. For example, reinvesting profits in brokerage accounts or super-funding 529 plans can help you get closer to early retirement or achieving your other investment objectives. A fiduciary financial advisor can also provide professional advice and help you develop a comprehensive plan that addresses both your short-term needs as well as your long-term goals.

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