6 Questions to Answer Before Considering a Startup IPO

February 23, 2015

7:00 am

Every year we see dozens of companies going public, usually attempting to raise capital in the hopes of expanding. This process of getting an initial public offering (IPO) isn’t a walk in the park though; plenty of companies try to go public but are halted by an unforeseen issue.

That is, unless they have help.

Advaion is an independent consulting firm that remains dedicated to helping their clients go through significant growth, update their systems, and prepare for an IPO. In effect they’re giving a competitive edge in an ever-changing economic and technological landscape.

Throughout 2014 we saw a host of companies go public and reap the benefits of having a streamlined, agile business:

  1. Alibaba: $22 billion
  2. Lending Club: $870 million
  3. King Digital Entertainment: $500 million
  4. GoPro: $425 million
  5. Virgin America: $306 million
  6. OnDeck Capital: $200 million
  7. Grubhub: $200 million
  8. Coupons.com: $168 million
  9. Zendesk: $100 million
  10. Truecar: $70 million

It raises an important question though, which Advaion wants to help their clients answer: how do you know when you’re ready to take your own company public? Further, why do you need help with the process?

“It’s very costly to get halfway through the process and then have to go back to square one because you missed one, small step,” says Pavan Satyaketu, Managing Director at Advaion.

Satyaketu has 20 years of experience doing IPO work and helping companies assess their own situations before going public. From his perspective, a company must have all of the proper systems and personnel in place for optimum readiness.

Further, according to Satyaketu the first thing any company investigating an IPO needs to do is set a realistic timeline. That is, you need to start the ball rolling sooner versus later: you should begin everything a minimum of two years out.

“Get used to doing what you need to do before you’re a public company,” says Pavan. “Once you put the processes in place it’s easier to navigate the IPO waters.”

Once your timeline is established you have to start digging in and examining your entire company, which will one day become exposed to the public. Advaion has these 6 questions they want each client to ask themselves:

  1. Do you have a clear vision of what your company is today and what it will be in the future?
  2. Do you have the appropriate management team in place?
  3. Do you have the right team members on our board of directors?
  4. Do you have a good history of earnings?
  5. Do you have appropriate account and information systems in place?
  6. Are you willing to absorb the initial and ongoing costs involved in being a publicly traded company?

According to Advaion, you should be able to effectively answer each of these questions to determine if going public is something you’re ready for. You also have to be acutely aware of the financial costs associated with going public.

The IPO process offers successful companies a new source of capital that can facilitate continued growth. The Advaion team can bring an objective perspective into the decision you’re making, and should you choose to go through the process they’ll be there with you every step of the way, guiding you towards IPO success.

 

 This information is brought to you through a sponsorship from our partner Advaion.

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Will is a Senior Writer with Tech.Co, based out of America’s Finest City: San Diego. He covers all territory West of the Mississippi river, digging deep for awesome local entrepreneurs, companies, and ideas. He’s the resident Android junkie and will be happy to tell you why you should switch to the OS. When he’s off the clock, Will focuses his literary talent on the art of creative writing…or you might find him surfing in Ocean Beach.

Follow Will on Twitter @WJS1988

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