Preparing for a big IPO is much like playing your best round of golf. The right conditions must meet confidence, a seasoned skill level, and the right tools. Playing with supportive friends and allies doesn’t hurt either. Like golf, IPOs can be elevated to the highest heights or turn into a round of flubs.
As a golfer and CEO, I believe there are some notes worth having when weighing and preparing for an IPO to set yourself up for the best possible outcome. The first has everything to do with timing and logistical market considerations.
Deep-Dive Information
Timing is everything for an IPO. The first macro consideration is the market. It has to be on an upward track. Good, real-time information can relay this information to founders and their boards.
A company must have a good management team and pick leaders. According to HBR, the top four characteristics of CEOs include decision-making with speed and conviction, engaging for impact, proactive adaptability, and delivering reliably. CEOs who ranked high on reliability employed several other tactics as well, reports HBR. 75% of evaluated CEOs were rated strongly on organization and planning skills. They established business management systems that included a cadence of meetings, metrics dashboards, clear accountability, and multiple channels for monitoring performance and making rapid course corrections. Most importantly, they surrounded themselves with strong teams.
Sponsors and private funders all have to be aligned and supportive of the IPO. And a new board will be created following the IPO to take over the old board to address the requirements (finance, compliance, regulations, etc.) of being a public organization.
Weigh Market Conditions
If market conditions are encouraging and a company has the right leaders in place, it’s time to begin taking the measured steps to prepare for the complex IPO process. A successful IPO is defined through two primary metrics: Market Capitalization (equal to or greater than other industry players) and Market Pricing (the difference between the offering price and market capitalization).
Organizations can enjoy a more lucrative and effective IPO by taking the necessary considerations to move from private to public. Ensuring the right leadership is secured and seeking favorable market conditions will enforce a strong foundation that increases the likelihood of success and investor confidence.
