An Initial Public Offering (IPO) is the first time that shares in a private company are offered to the public.
IPOs are often issued by smaller, younger companies seeking capital to expand, but they can also be done by owners of larger privately-owned companies seeking an exit.
An Initial Public Offering (IPO) is not for every company, despite the hype that is often associated with this alternative.
Despite this, a small subset of mid-sized, privately-owned companies are excellent candidates for IPOs and pursuing this route can result in spectacular success for exiting owners.
- Inflated valuations over a private exit. This equity may be used to fund the exit of one or more existing shareholders.
- More cash available to fund your optimisation program pre-transition.
- Ongoing access to raise further capital to fuel growth.
- Prestige of going public.
- Costs & risks associated with a failed IPO.
- Short-term pressures for quarterly earnings.
- Compliance & PR costs.
- Liabilities for non-disclosure.
- Culture change and other changes to your legacy – entrepreneurial vs. corporate.
- Hostile takeover.
- Lock-up periods where shareholders may not sell shares.
Important – The choice of transition strategy requires careful consideration of the consequences and trade-offs involved. We devote a lot of time with clients in choosing the smartest transition decision, that is aligned with individual circumstances.