The Top 10 Questions You Should Ask Prior To Taking Your Company Public - A Two Part Series - Part Two
Added on April 8, 2018
Is The Right Investment Banker In Place?
When the stock market is doing well, investment bankers tend to knock on doors with the offer to take private companies public. Do not hire the first one that shows up at your doorstep or offers you the cheapest price. Keep in mind that you get what you pay for. Conduct research on each investment banker that you are considering. Review the list of companies they have taken public over the last three to five years. Carefully evaluate their track records and make sure to grill them on the exact deal structure that they are offering your business.
Are You Planning To Alter Your Business Model?
If you are planning any changes to your current business model do it prior to going public. It is much more difficult to make these adjustments when you are under the microscope of the public eye. You will need to prove to investors that the alterations make sense and will produce more revenue or earnings for the company. This should not be based on a theory, but proven numbers. Transitioning to an updated business model takes time. The process should be enacted a minimum of twelve to eighteen months prior to going public.
Are You Comfortable With The Transparency Requirements Of Being a Publicly Traded Company?
Taking your business public increases the demands for fair disclosure and transparency. It is important that public companies are careful about the ways they communicate news that could affect their stock price.For example, in 2013 the SEC announced that publicly traded companies could use social media to make important announcements. However, they must alert investors in advance. Your social media team must work hand in hand with your investor relations team in order to comply with SEC rules and regulations.
Is Your Business Large Enough To Make An Impact On The Public Markets?
Prior to attempting an initial public offering your company should have a growing and reliable revenue stream that compares favorably with other businesses in your industry. That being said, do not rush to the IPO stage simply because you have hit that target. If your company has reached revenues of $50-$75 million per year in sales it does not necessarily mean that you are ready to go public. Your company should also be at a defining moment and have the certainty needed to be a solid public business.
Should You Test The Wall Street Waters Prior To Taking The Company Public?
If you are not one hundred-percent convinced that an IPO is right for your business, there is a way to test the waters first. The Jumpstart Our Business Startups Act, or JOBS Act for short, was established by the federal government in 2012. This law enables businesses to file for their initial public offerings in a more covert manner. The JOBS Act gives you the opportunity to receive feedback from the SEC and the ability to meet with potential investors before the circus begins. The JOBS Act helps companies determine if an IPO is a good idea at the current time without sharing information with the general public.
Are There Other Alternatives?
Taking your company public can be a profitable and rewarding experience. However, there are situations when an IPO is not the best method to receive a maximum return on the effort, finances, and time that you have invested in your business. Please consult with an expert in these matters to review all of your options.
Navera Group provides public company readiness to businesses that are planning their initial public offering. Our program focuses on preparing your organization to become a publicly traded company, filing the registration statement, and preparing the financial reporting environment. Navera Group also provides much needed support throughout the entire IPO process. If you have any questions regarding an IPO situation, or would like more general information about our array of services, please contact us today. Phone: 617-356-7516; Email: Info@Naveragroup.com; Website: www.NaveraGroup.com