The market can be a fickle place. And there are no hard and fast rules about when to enter the public arena. But timing can be an important consideration in the success of your IPO. Obviously, if you are serious about taking your company public, you should hire a professional firm to advise you. However, before spending the time and resources to engage a professional advisor you should carefully consider the following points:
1. Why will your company appeal to investors?
The ultimate success of your IPO will be determined a number of different factors - not all of which are under your control. However, the success of your IPO will depend primarily on investor perception. Investors will be making a bet on your ability to deliver a steady and growing stream of profits. If they believe that you are capable of delivering in a big way, they will demonstrate that confidence by taking an investment risk on your company. Investor perception, in turn, will be defined by several things. The easiest way to convince investors is to come to the table with a track record of success. However, even if your historic performance does not instill confidence, all is not necessarily lost. History has shown that investors may still be willing to invest heavily in an idea that has not been fully exploited, providing that they have confidence in the business plan and the management team. Investors will typically be looking for good answers to the following questions:
a. Do you have a compelling business plan?
b. Do you have a history of high growth in revenues and earnings?
c. Are you positioned to assume a leadership role in your industry?
d. How large is the market for your product or service?
e. Do you have an experienced management team?
2. How robust is the market for IPO's?
Even a great company with a terrific history and a fail-safe business plan can potentially lose millions of dollars by going public at the wrong time. If investor sentiment has turned bearish, or if overall market conditions are not ideal for an IPO, your IPO may not be as well-received - or as well funded - as it could have been. You would do well to remember that you only have one chance to do an Initial Public Offering. A strategic entry into the marketplace will be critical to your success.
