There is very little more exciting than seeing visible growth in your business – whether it be your product offering, your customers’ satisfaction levels, your staff count, or (and most crucially) your bottom line. And whether your organisation, or you as an individual, is looking at growth from a M&A perspective, a Management Buy-Out, a Management Buy-In, or simple investment in order to expand, growth can be daunting, at the same time.
But when it comes to IPO, making sure that you have all your ducks in a row, your t’s crossed and your i’s dotted, (we couldn’t find any more jargonesque metaphors to help with this), is critical to seeing success, first-time around.
We review 4 of the biggest mistakes to avoid in the lead up to IPO
- Too focussed on GETTING public, than BEING public
Going public is not about winning a race. It’s not about getting to a finish line and celebrating in glory with champagne, a glossy photograph and a few warm handshakes. In fact. It’s the end of anything. It’s the start of something much more. And unfortunately – many businesses who pursue this route of business growth get lost in the glorious celebration, that they neglect to maintain the same amount of effort put in to get them there – that within 2 or 3 years, their business loses complete value, through whichever means the market deems necessary, and turn into yet another statistic for how not to do something.
Listing a business publically means that you are ready to grow. You’re ready to take on a new challenge and you have the right team around you to prepare, get you there and maintain the operational and financial imperatives to see your business continue to succeed – long after the bell has tolled.
- Not trusting your gut!
We’ve seen it happen so often before, and unfortunately – going public, means… you’re going public. You’re making a decision to have your businesses scrutinised and reviewed. And one such bad example of how not to go public was the mighty TheGlobe.com. At the peak of the internet boom, the founders of TheGlobe.com showed initial hesitations at going public by first proceeding, stepping back, but then deciding to go for it anyway, and at first, it was a roaring success. The IPO stock was offered at $9 a share and blasted to $65 by the end of the trading day. But the celebration wasn’t long-lived. When the bottom fell out of the online advertising market in 2000, 2 years after listing, TheGlobe.com faced serious problems – and they frantically tried to find new backers. By 2001, they’d last half their staff and sold of major web assets. Today, the company is just a shell of its former self – not offering much, but still hanging on. Fear is not Gut Instinct. Gut instinct, most often, is based on insight and knowledge. And when it’s telling you something, listen to it. And find the right approach to grow your business in the way that’s appropriate for it.
- Believing that it can’t fail
Not straying too far from any of the other points mentioned in this blog post – an IPO can fail. Before. And After. Going public is not a sure-fire guarantee at a lifetime of business longevity, but rather a step up into your next business transition that indeed offers growth, but more importantly, expects a lot more from you and your business in return. Taking a business public is a long process – and one that should never be entered into lightly. Whether it was Pets.com who struggled with their business structure before even considering a public listing – only for it to be confirmed, but publically so, when their share price dropped from $14 a piece to only a few cents, it was pretty evident that the disconnect felt between the founders and true market reaction was palpable. It can fail, and it will, if you haven’t done the necessary preparation, if you haven’t got the right team guiding you and if you don’t understand the importance of listing and sustaining that for the future.
- Having the wrong team around you to get you nowhere.
We draw on the examples like Shanda Games where their underwriters JP Morgan and Goldman Sachs chose to bump up the number of shares at the last minute and setting a high opening price leaving the investors nowhere to go, and no new investors willing to invest, post listing. Having the wrong team is far worse than not having a team to support you at all – and when it comes to listing your organisation publically – getting the right operational and financial support to take your vision to the next growth phase is critical to a sustained growth path.
If you are ready to move forward, but are keen to avoid some of the IPO listing disasters mentioned in this blog, then speak to us. We have extensive experience of the pre through to post-IPO process and with our operational know-how, we are the team you need to get you there. Get in touch today.