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IPO: When the window of opportunity for an IPO opens, winning companies are readyFor fast-growing private companies seeking to raise capital, an Initial Public Offering can be a superior route to funding growth. While challenging market conditions are here to stay, companies need to be fully prepared to leverage the window of opportunity for an IPO, whenever it becomes available. If you are leading a company that is preparing to go public within the next few years, you have to take into consideration several nuances: the strength and buoyancy of capital markets, current economic indicators, and your companys performance.
Notwithstanding mega-economic trends and conditions, you need to ask very practical questions if you are contemplating an IPO: how do I prepare properly for the IPO transaction; how do I cultivate worthy investment in a dynamic environment and steer my business to success as a public company?
EY is one of the leading advisors to companies considering an IPO. Not only have we guided numerous companies through the IPO filing process, but we have also helped them improve tax structures, compensation plans, business processes and controls, corporate governance structures and more. That gives us a tremendous perspective in guiding you through the IPO transaction and beyond.
How do I construct an IPO plan? How do I establish the right team, processes and infrastructure? How do I build a strategic and investor relations function? What are my responsibilities for the road show and post-transaction?
All of these questions and more are answered by our experts, comprising experienced executives who have undertaken IPOs, as well as advisors critical to the process.
No one will tell you that going public is easy, but the rewards may be monumental. The key considerations here are advance preparation, experienced guidance and effective execution.
EY will be delighted to guide you through your IPO journey. We wish you every possible success!
IPO: Is your company ready?To achieve strategic targets, a company will require access to funds. You need to take time to think and explore various funding options available to help your business grow. Floating an IPO is one of the primary ways to access capital. Do not plan to go public because you think it is the end of the game, but know that it is indeed the beginning of a serious journey.
Companies that have completed a successful IPO know that the process involves a complete transformation of the people, processes and culture of the organization from a private enterprise to a public one.
So, how does a company begin the all-consuming task of preparing to go public?
It is up to the CEO and senior executives to strike the right balance between executing the IPO transaction and managing the day-to-day operations of the company. In the life-changing journey from the private realm to public markets, senior managers face numerous leadership challenges that test the readiness of their business to go for an IPO. Therefore, the key question that a CEO and senior executives need to ask is, Are we prepared?
The IPO value journey with EYThe IPO value journey for an organization involves putting a sound IPO plan in place, which will typically include the pre-deal, execution and post-deal business phases.
IPO pre-deal
Preparing for an IPO is an intense and arduous process. EY brings in the right resources to manage the program and assist you in your preparation for the IPO event. We also ensure that strong operational execution does not get diluted, as your executive team needs to devote significant time and energy while preparing for an IPO.
IPO execution
It is important to recognize that the IPO event is not an end but the beginning of a life-changing process for your organization that will continue long after the actual event.
EY can help you in the process of organizational strengthening. This, in turn, would help you tackle the pressures and nuances of being a public company.
We can provide the following services relevant to the execution phase:
Develop a clear and compelling business strategy.
Build robust executive teams.
Early attention to accounting implications.
GAAP transition and implementation.
Tax re-structuring.
Strengthen corporate governance.
Strengthen process and internal controls.
Develop performance based culture.
Improve transparency and foster investor confidence.
IPO post-dealThe IPO post-deal phase revolves around executing the business plan to increase revenues and earnings in line with, or faster than, expectations. Businesses must stay focused on completing the transformation.
In this phase, we continuously assist our clients in remaining focused on delivering on revenue and earnings targets and improving operational efficiency.
Preparing for the IPOjourney
Internal preparation
IPO pre- deal IPO execution IPO post-deal
Day-one readinessIPO design, concept and placement with external team
12
3 4 56 7 8
910
Keeping options open
Timing themarketright
Building rightmanagement & advisoryteams
Buildingbusiness &financialprocesses
Establishingcorporatestructure &governance
Managinginvestorrelations &communications
Deliveringan effectiveroad show
Attracting the right investors and analysts
Delivering on your promise
Review/re-create
Why choose EY?EY has a strong history of assisting companies in delivering successful IPOs. The firm is aware of the essentials of what it takes to succeed as a public company. You can count on us to draw upon our global network, market leadership, industry knowledge and insight to guide you before, during and beyond the IPO process.
Our IPO specialists help businesses like yours to evaluate the pros and cons of an IPO. We demystify the process, examine the alternatives and help you prepare for public pressures. Our market-based insights can help your business achieve its potential.
Make sure you know how to prepare for this transformational transaction and manage your newly public company
What do highly successful IPO companies do?
Prepare early
Begin the IPO readiness process early enough, so that your pre-listed company acts and operates as a public company at least one year before the IPO.
Commit substantial resources to the IPO process and build a quality management team, strong financial and business infrastructure, corporate governance and an appropriate investor relations strategy that will attract the right investors.
Do not underestimate the amount of time that the IPO journey will take, and the level of scrutiny and accountability faced by a public company.
Outperform competitors on key benchmarks
Maintain strong financial projections such as debt to equity ratios, EPS growth, sales growth, RoE, profitability and EBITDA growth; investors base most of their IPO decisions on financial factors.
Build a strong corporate governance structure; investors base their IPO investment decisions on non-financial factors, especially the quality of management, corporate strategy and execution, brand strength and operational effectiveness, and corporate governance.
Articulate a compelling equity story, backed by a strong track record of growth that sets you apart from your peers, while maximizing value for owners.
Evaluate capital-raising options
Consider adopting a multi-track approach and expanding the number of capital-raising strategies, including foreign listing, strategic sale to a trade or financial buyer, joint venture or a private placement.Pursue pre-IPO transactions to achieve the maximum value, especially in the case of debt financing and refinancing, corporate reorganization and private placements of business alliances.
Address investors current concerns Recognize the need for enhanced
corporate governance in terms of recruiting qualified non-executive board members, improving internal controls and forming a qualified audit committee.
The key success factors for an IPO include:
Attractive pricing
Compelling equity story
Confidence in management
Right timing
Listing venue selection
Reputation of the bankingsyndicate
Size of the transaction
0%
% of respondents
20%
2.0%
6.5%
8.5%
28.9%
35.4%
56.9%
64.6%
90.7%
100%80%60%40%
Readiness to provide transparencyand good corporate governance
Fine-tune your internal business operations with focus on working capital management, regulatory risk and rationalizing the business structure.
Deal with accounting challenges pertaining to asset valuation impairment, consolidated subsidiary financial statement issues and revenue recognition.
* According to our 2013 Global IPO institutional investor survey and our decades of IPO experience
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EY invests in IPO guidance to help you succeed
Business operations and capital flows are becoming increasingly globalized in the backdrop of new centers of economic strength and innovation emerging worldwide. Potential market-leading companies are springing up in places such as China, India and Eastern Europe, in addition to the mature markets of the US and Europe. While the majority of companies ultimately choose to list on their domestic stock exchanges, more business leaders are now considering the pros and cons of accessing public capital in a foreign market. In line with this, EY has developed Stock Exchange guidance, which is designed to be an objective, fact-based comparative tool for business leaders weighing exchange alternatives. It includes general listing standards and criteria for the most important stock exchanges worldwide.
IPO roadshowsEYs IPO roadshows are aimed at giving attendees a complete run through of what is involved in taking a company public. The IPO roadshow offers an unparalleled opportunity to test the waters without risking your business.
The IPO roadshow enables delegates to:
Understand why companies go to the market, their objectives and the results.
Explore alternative ways to raise finance and the most suitable one for you considering your strategic intentions, your personal and business aspirations, and market benefits.
Learn from other peoples experiences of taking their companies to market.
Meet people in a similar position in a confidential environment.
Global IPO center of excellence
Virtual IPO resource hub.
Interactive tool market and IPO data analysis.
Access to EYs global IPO network.
webcasts, videos, current trends and IPO journey preparedness.
Live chat network.
Conduct an IPO readiness session An IPO readiness session is designed
to guide your company to make a strong debut in capital markets. It fosters strategic thinking and discussion around business objectives, capital-raising strategies and organizational change required to execute and sustain a successful IPO and alternative transactions.
Hot topic:
Understand the measures that matter and what it takes to win in capital markets.
Identify your companys strengths and weaknesses and learn how to close the gaps.
Learn how to manage the process, as well as other players and your organization during this time of transformation.
IPO readiness sessions last two to four hours and are best held in an environment without distraction at your company or at an EY office. Contact our IPO Leader to set up a session.
EYs global IPO center puts our knowledge in your hands. The center is a virtual hub of information that includes:
Where to list and to raise capital.
Webcasts featuring IPO success stories.
Perspectives on the challenges and risks of going public now and next year.
Insight into the IPO journey, spanning from start to finish, to help you realize life as a public company.
Ernst & Young LLPEY | Assurance | Tax | Transactions | AdvisoryAbout EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
Ernst & Young LLP is one of the Indian client serving member firms of EYGM Limited. For more information about our organization, please visit www.ey.com/in.
Ernst & Young LLP is a Limited Liability Partnership, registered under the Limited Liability Partnership Act, 2008 in India, having its registered office at 22 Camac Street, 3rd Floor, Block C, Kolkata - 700016
2013 Ernst & Young LLP. Published in India. All Rights Reserved.
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This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Ernst & Young LLP nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.
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Dr. Martin SteinbachArea IPO leader - Europe, Middle East, India, Africa+ 49 6196 996 [email protected]
Your contacts
R BalachanderArea IPO leader - India+91 124 671 [email protected]
Access the Center at www.ey.com/ipocenter
