The IPO market naturally slowed down during the first half of the year. European IPO markets raised €5.400bn in the first half of 2020, compared with €12.200bn in the same period of 2019. But it's not all bleak and gloomy: PwC expects market appetite for IPOs increase and we are already seeing good signs. Software listings are expected to rebound significantly, Europe has the most valuable fintech startups after significant funding, while small startups are encouraged to explore IPO avenues. While the success of the pre-pandemic funding rounds could bode well for the IPO market in 2021, startups seeking investment cannot rest on their laurels. The bar to stand out and be noticed will be even higher. About the Author Dave Rosenberg is Director of Business Development and Private Equity at Oracle NetSuite In such an environment, preparation and planning become paramount to attracting investors, which means stopping business processes and ensuring an organization is ready to scale. With that in mind, here are six steps startups can take to improve the odds of success in a future IPO.
one). Put your bank in order
The importance of having a solid and complete financial foundation before an initial public offering is self-evident. Not only is it important to note that a disorganized approach to purchasing financial software can prove costly down the road, but without a system that gives key stakeholders proper and timely access. to critical business data, the journey is long. Stronger. Companies wishing to go public must be prepared to provide financial data, which means that systems must be able to provide it. Investors and underwriters will want to see a strong debt-to-equity ratio, sufficient market capitalization, and predictable earnings and income streams. Cloud-based ERP systems provide the financial information and data needed to prove a company's reputation. Businesses must establish processes for key areas that affect revenue, staff, and all other major expenses, and the infrastructure must have the controls to manage these processes along with the flexibility to adapt. to later changes.
two). Prepare for rigorous financial reporting
By eliminating manual reconciliations and data entry, a business can scale more efficiently as it grows in volume or complexity. The ability to analyze past performance and predict future performance requires investments in business intelligence and analytics. Cloud ERP provides robust reporting and analysis around key performance indicators (KPIs), with an intuitive interface that enables even inexperienced users to perform complex analysis.
3). Establish good corporate governance
The public marketplace does not reflect well on organizations that cannot govern themselves effectively. Those considering IPOs should establish a governance framework that empowers board members and senior management. Many private companies do not fully understand the importance of governance to long-term success, and those that make governance a priority often underestimate the time and effort required to establish it effectively. When a company goes public, regulators and investors require that it be coordinated, transparent and consistent, unlike the loose policies that can prevail in many private companies. In public securities markets, governance is not optional, and all directors and senior executives need to understand exactly how they relate to each other, as well as to the organization and its stakeholders.
4). Establish investor relations
While investor relations can't sell a product or get you great deals, it can help an organization maintain its reputation despite the ups and downs that each organization goes through. Once a company goes public, it becomes an open book, which means that the number of important stakeholders will begin to reach far beyond longtime colleagues and collaborators. A well-oiled investor relations (IR) operation acts as a gatekeeper, ensuring that the company communicates effectively with its investors by skillfully integrating information from the finance, marketing, and legal teams. A strong IR team, backed by metrics that provide a clear picture of the business, needs an infrastructure capable of reporting on those metrics. This requires filling in the gaps and creating a visible and transparent report as the organization grows.
5). Investors want rapid growth, so prepare to scale
Continuous improvement is a key part of scaling a company, and investors want companies at that scale. By having a cloud ERP as the nerve center of an organization, the company can implement process automation to manage payments, shipping, orders, inventory management, and other business functions. This will help organizations grow quickly and hire quickly as revenue increases to sustain that growth. Cloud ERP is the foundation from which an organization is small and can take on more complex operational tasks as companies evolve into larger enterprises.
6). Know the story of your business and how to tell it.
The effective articulation of everything from the product roadmap to brand identity and growth goals attracts investment once a company goes public. It is not enough to have a good story; it is essential that the management of the company can say and support it. This means having a communication and investor relations team that is also adept at promoting the brand proactively. Company storytellers must be armed with financial performance and KPI information provided by a robust ERP system. They need to tell their story in a way that builds trust that attracts customers and investors in order to enhance future growth. It is clear that the future success of the IPO will only be found by those willing to stay ahead. Without the above preparations, or a solid underlying system, the process becomes much more bumpy. On the contrary, following these steps and supporting them with an effective ERP implementation greatly improves the chances of future IPO success.