Deciding to take your company public is a big decision, but it’s not the only important choice you have before you. Timing is also important. Taking your company public at the wrong time can adversely affect the results you’ll see on the open market. Here are a few tips to help you choose the most opportune time for your initial public offering.
You Understand Your Business
Once your business goes public, your company’s investors and shareholders will expect a certain degree of transparency. You’ll have to be able to generate financial forecasts for your business, so your investors will know what to expect. Before going public, it’s in your best interests to master a method for forecasting the future performance of your business. This will help you meet your shareholders’ expectations.
You Have a Good Team
Everyone knows the saying about one bad apple ruining the bunch. This is especially true for a business that’s about to go public. You will want your business to be as productive and efficient as possible, so you’ll have to build a team that works well together. If you have just one executive who doesn’t meet the team’s needs, that can derail the entire management strategy. The right team can provide your company with a sense of stability, which investors will view as the basis for growth and success.
You’re Ready for an Audit
If your books are consistently a mess and error-ridden, delaying your IPO may be for the best. You’ll need to be ready for audits without much notice, so your books should be in good shape. If you do close your books on time at the end of each quarter and can generate accurate statements that summarize the financial health of your company, you may be ready to go public.
Above all, you should prepare yourself for going public by realistically assessing your business. Your underwriters will help you determine the value of your business, which will help set the price at which your shares will initially be sold. The valuation of your business may be lower than you anticipate, so it’s important to keep your expectations low. Additionally, the condition of the market will also affect your IPO, so you may want to choose the timing of your IPO to coincide with a rising market.