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Initial Public Offering

The king´s road of corporate finance

An Initial Public Offering is still the king´s road of corporate finance. What are the strategic reasons a company should consider an initial public offering:

  1. If a company needs a significant amount of permanent capital it won't have to pay back to a bank or other lender
  2. If a company wants to strengthen its equity position in the balance sheet
  3. If a company cannot reasonably expect to raise venture capital from institutional funds
  4. If a company needs to raise more than 4 m EUR. At this point, stalking business angel investors can be too time consuming and too difficult
  5. If a company seeks growth through acquisitions, and needs a "currency" other than cash to attract and consummate deals
  6. If a company wants to increase name recognition and standing at its suppliers and customers

In addition to strategic considerations, being a public company often confers the following benefits:

  1. A public company has direct access to the capital markets and can raise more capital by issuing additional stock in a secondary offering.
  2. Public companies can use their common stock to attract and retain key employees
  3. Being a public company is more prestigious than being a private company
  4. Going public provides owners and founders an exit for selling their ownership holdings in the business
  5. Public companies are often more worth than private companies.

Beside the benefits of an IPO it has to be mentioned that the going public process is extremely complex and does not allow any technical failures and needs the post professional preparation respectively.
With more that 30 IPO accompanied by the EQUITYplus team we do have the experience and know how in order to provide our clients the most efficient and valuable realisation of the IPO process.

Due to our experience we would like to give you the following recommendations:

  1. Company owners have to assure that during the time consuming IPO process the management is able to concentrate as much as possible on the successful continuation of daily business activities.
  2. Before talking and discussing the IPO case with investment banks the check-up and as the case may be the improvement of internal IPO maturity has to be finalized (quality assurance!)
  3. The documentation of IPO maturity and IPO attractiveness has to comply with information needs and expectations of investment banks and financial analysts. Furthermore, it has to withstand their critical comments and questions.
  4. Do not hesitate to select the IPO lead manager on the basis of a professional beauty contest for the investment banks. It pays!
  5. The disclosure of the IPO plan should not happen before finishing the due diligence process successfully.
  6. Get on time in direct contact with selected investors to start investor education early and to ensure a financial market based company evaluation. That assures the placement success.