MANILA, Philippines — An initial public offering, or IPO, is by strict definition the instance when a privately owned company decides to share part of its ownership to stockholders. “Going public” is the jargon businesspeople know too well.
For numerous companies here and far, being able to go public is the dream, and for several good reasons.
First, this means that interested individuals and institutional investors can purchase stock and contribute to the company’s equity. It also invites good tidings and signals that a company is ready to access more capital in order to further expand its business. With more capital, the company can invest in more people under its wing, while upgrading equipment and infrastructure.
Given this positive and progressive projections, the company can only attract top clients and ventures.
While an IPO, without doubt, is one of the biggest steps a company overtakes, it is also riddled with challenges.
The company becomes accountable to the public, which means being subjected to periodic reportorial disclosures (financial statements, major and market-sensitive information, among others). It must also adhere to corporate governance principles.
Encouraged to pursue IPO and start with the process? It’s important to have both capacity and foresight. Here are some of the important factors to consider before going public:
1. Time is of the essence
IPO is no impulse undertaking and requires a lot of work. That is why, in this context, an ample amount of time is needed for thorough preparation.
When a company has reached maturity, then it’s also time to announce its interest to go public. It normally takes around five to eight months to complete this phase so that there’s room to complete specific requirements.
This also gives leeway for companies to identify any weakness and make the proper adjustments and housekeeping.
2. Assemble the right people
At this stage of the company’s growth, it is all the more imperative to have the right people at its beck and call. It needs the intelligent grit and know-how of the people in its employ to manage the rigors of an IPO process and consider the overall competitive environment where the company operates relative to its industry.
A well-oiled machine of key managers, executives and their teams with strong and effective communication skills should lead the charge. They also need to represent the company in the market against the demands and scrutiny of regulators, investors, and analysts.
3. Have the ‘receipts’
In its foray into the challenges of IPO declaration, a company should not be without proper financial reporting systems. Since there are general regulatory requirements, the company needs to comply before it can be listed (as well as after it is listed).
The requirements are covered by the Securities Regulation Code of the Securities and Exchange Commission (SEC) and governed by the consolidated listing and disclosure rules of the Philippine Stock Exchange (PSE).
Having an organized system guarantees that metrics, business results, and other relevant information are monitored and secured to public filings down to the most minute detail.
4. A fail-safe narrative
Part of a thriving company is a compelling story to tell—an “IPO growth story”—and its integration must be seamless when preparing principal offering documents.
Together with the IPO booklet, the registration statement and the “road show” presentation, a well-crafted story is a significant measure that enhances the way a company positions itself, its strengths, opportunities, and strategies. A prospective IPO investor would look for a return to compensate for the risks involved vis-à-vis other capital market instruments.
A tightly-knit narrative also gives the company’s legal team a chance to anticipate inquiries and comments as the SEC and the PSE review the filing.
5. A trusted investment bank
Business owners, top executives, and young entrepreneurs who want to take their ventures to the next level can greatly benefit from the expertise of a formidable investment bank. Through this, the company gains more insight and counsel as it goes through the rigors of the IPO process.
This is where BDO Capital comes in.
BDO Capital is a one-stop shop investment house that offers expertise in capital raising, be it small- or large-scale in nature, having generated close to P1.7 trillion in just three years from 2016 to 2018.
With its seasoned deal managers having keen insights into varied industries, BDO Capital has the ability to provide tailor-made solutions that align with the company’s needs, no matter how complex.
It has repeatedly and successfully brought to the market the most innovative issuances—making it the preferred capital investment partner of both the government and its corporate instrumentalities, and private institutions in the Philippines.
For more information on how to take your company to newer and greater heights, visit BDO Capital at https://bit.ly/31hbuCT.