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How Businesses can Conduct a Successful IPO

By Rohan A T

IPOs or initial public offerings refers to the process in which private businesses offer their shares to the public in a new stock insurance. IPOs allow businesses to raise the capital for their company from public investors and the capital raised through IPOs can be used to carry on the operations of their business. By allowing companies to raise capital through the primary market, IPOs ensure that the company is now a public company owing to the fact that prior to issuing IPO, companies are considered private. One thing to note is that, before businesses can issue their IPO, they must meet the requirements which are set by the Securities and Exchange Commission (SEC). IPOs are also an opportunity for businesses that runs their operations with a small number of shareholders to sell their shares to the public and get investments in order to expand their business. The truth of the matter is that a lot is riding on how IPOs perform in the market and as a business owner if your IPOs are getting a positive feedback in the market and people are investing in your firm, then your chances of doing good in the industry are considerably higher. Now, let’s take a look at how businesses can conduct a successful IPO and make the best out of the given situation.

  • The Role Played by your CFO: When it comes to deciding the success and failure of your IPO, the role played by the CFO of a firm can’t be stressed enough. Generally, CFOs co-ordinate all the business aspects of conducting an IPO and he/she plays a pivotal role when it comes to marketing it effectively and ensuring that your IPOs have proper visibility in the market. It is very important to offer ample emphasis on marketing your IPOs effectively owing to the fact that, if the public doesn’t know about your IPO, then how will they be able to invest in your company. So, your CFO must be someone who has a clear understanding about the business aspect as well as the stock market perspective of issuing the IPO.

As a company, you have to look for investment bankers that can line up institutions, handle the wealth clients in an appropriate manner, successfully manage the processes, and while at the same time make sure that SEBI guidelines are not broken.

  • Picking a Capable Investment Banker: After the CFO, the next party that has a massive say in the success of your IPO is the investment banker. Retail and institutional investors have to be convinced before buying your shares and investment bankers need a compelling story to get them on board. As a company, you have to look for investment bankers that can line up institutions, handle the wealth clients in an appropriate manner, successfully manage the processes, and while at the same time make sure that SEBI guidelines are not broken. Basically, an investment banker needs to understand the pulse of the market and be able to market your IPOs in the best possible way.

 

  • Maintaining Transparency: Another important aspect that a company should keep in mind if you are issuing an IPO is to keep the utmost transparency. The fact is that a higher level of transparency as well as disclosure practices are bound to improve the performance of your shares in the stock market. So, make sure that you don’t mess with the facts of your shares and try to showcase false numbers regarding the cash flows and EBITDA of your shares to name a few. Maintaining this transparency throughout is crucial when it comes to achieving sustained success in the industry.

The three above-mentioned points make up some of the things that businesses should keep in mind before issuing an IPO owing to the fact that these tips can help your IPOs to perform comparatively better in the stock market.

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