How to Know If Your Business is Ready for an Initial Public Offering (IPO)

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5 New Ways to Determine That Your business is Ready to go Through an Initial Public Offering (IPO)
Going public is a huge decision for any company. How do you get there? And how do you know if it's the right path for you?

Whose Today’s Guest?

Phil Daka has widespread knowledge of investment policies and regulations defined by national agencies. He also has 12 years’ worth of experience in leading international communication, sales, and marketing organizations and multinational teams to exceed revenue and profit goals.

Defining an IPO

An IPO is a process of offering shares for the first time by a private entity to the public through a stock market. Companies that eventually decide to go public having met all the requirements needed, do so in order to recapitalize and expand as a business.

Size of Company Considering an IPO            

For any business thinking of going through an IPO, there is a need to clearly understand just how big the business is. All the stock markets in the world have a thresh hold on how they gauge the type of business or company that can be admitted.

One needs to know what bracket their business falls under, as there two markets that one can list under and that’s the SME market and the market for the big cooperates.

Determining what bracket your business falls under can be seen from the amount of turn over income your business rakes in at the end of the year. Another aspect to consider is the number of employees that your business has as well as the number of years your business has been in operation, in order for a company to approach a stock market there is a need for it to have been in operation for at least 4 years.

Understanding Valuation of your Business Once You List

If you’re big cooperation looking to go public, you will approach investment banks but if you’re an SME seeking to go public, one will need to approach Certified Stock Exchange Administrators called Designated Advisors. These advisors will help you understand the type of shares you are taking to the market and how they will be valued. They will help you determine whether your business is bankable or not. Approaching these advisors will help a business owner greatly understand how their business will be valued.

Draw Backs of Going Public

When a business goes public it automatically becomes a subject of public Scrutiny, there is a lot of financial information that should be made public and there is no information towards a shareholder, as long as the shareholder has a percentage of your shares they are entailed to information that concerns your business finances and dealings. Even when making new developments in the business one cannot do so minus listing on the stock exchange market that they are on. 

Key Insights:

 
  • You can only determine that your business is ready to go through an IPO when you have all the processes in check. This can be done by approaching a Designated Advisor.
  • Going public doesn’t bring you profit alone but much-needed expertise too.
  • Any company that is listed on any stock exchange market has enhanced creditworthiness.
  • There a lot of tax incentives that come with listing on the stock market.

As soon as you begin to think of going public, you need to know what size you are as a business

Insight Partners Africa— aims to bring you actionable insights from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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