A corporate finance law attorney provides assistance to companies during the initial public offering (IPO) process. When you decide to take your private company public with an IPO, you must be prepared for the complicated IPO process. You also must be ready to run a public company, with all of the myriad rules and strict regulations that go along with that prospect. The decision to take your business public is not a choice that should be taken lightly, as an IPO will fundamentally and irreversible alter your organization going forward.
A corporate finance law professional can assist you in the determination of whether or not your company is ready to go public. Factors to consider in determining if it is time for an IPO include:
- Whether the revenue your business brings in is both consistent and predictable: Once you go public, your company will need to file quarterly earnings reports and must be able to make earnings predictions so investors know what to expect. If you do not meet your company's earning's target, your stock price could plummet. As a result, businesses with unpredictable and wildly fluctuating revenues may not be a good candidate for an IPO.
- Whether the company can afford to fund the IPO process. Once you have taken the company public and sold shares, your business will have an influx of investment dollars that can be used for growth and development. However, the process of going public is a long process and your business will incur many expenses during the time it takes to become a publicly traded company.
- Whether there is growth potential within the market sector. Investors will expect to see company growth once your organization has gone public.
- Whether your organization has a solid leadership and management team: Investors are going to look to your company's leaders and managers to ensure the business is well-managed. Executives of publicly traded companies also must be prepared to actually deal with the public, including on earnings calls.
- Whether your company's financials are in order. The financial and accounting records of your company will be subject to an audit before the business can go public. The audit process is a lengthy and comprehensive process.
- Your company's debt-to-equity ratio. Highly leveraged companies may have low IPO prices and may struggle to sell the shares of their company stock. Reducing or restructuring debt could help to make your IPO more successful.
These are just a few of the key considerations that matter when it comes to making a decision on whether an IPO is right for your organization or not. The IPO process is complicated. A corporate finance law attorney can provide advice on whether to go public and should provide advice throughout the IPO process.