The IPO Process

A company goes through a three-part Initial Public Offering transformation Business process: a pre-IPO phase, an IPO transaction phase and a post-IPO phase. The pre-IPO transformation phase can be considered to be a restructuring phase where a Company starts the groundwork toward becoming a Publicly traded company.

For example, since the main focus of public companies is to maximize Shareholder value, the company should acquire management that has experience in creating this. Furthermore, companies should re-examine their organizational processes and policies and make any necessary changes to meet Corporate governance and transparency requirements. Most importantly, the company needs to develop an effective strategic management for growth that can persuade potential investors of the profitability and future growth of the company.

The IPO transaction phase usually takes place before the shares are sold and involves the achievement of goals that will enhance the optimal initial valuation of the firm. The key issue with this step is to maximize investor confidence and credibility to ensure that the share issue will be successful. For example, companies can choose to have reputable Accountancy and legal firms handle the formal paperwork associated with the filing.

These actions will prove to potential investors that the company is willing to spend a little extra to have the IPO handled promptly and correctly. The post-IPO transaction phase involves the execution of the business strategies outlined by the company in the preceding stages. The company should not strive to simply meet expectations, but rather to beat those expectations. Companies that frequently beat earnings estimates are usually well rewarded financially for their efforts. This phase is typically a very long phase, because this is the where companies have proved to the market that they are a strong, consistent performer showing good growth.

 

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