Questions That Should Be Asked At the Outset Before You Start the Process

Why go public?

Going public is often seen as a mark of great success for some companies. For others this decision is driven by growth and the need for capital. In other industries going public is a must for start-up companies that rely on stock incentives to attract and retain key staff, need the capital to carry out plans and need the profile to gain access to suppliers. Going public can provide many benefits and opportunities for you and your company but the decision is a major one and not one to be taken lightly. The advantages, disadvantages and alternatives need to be carefully weighed before a final decision is reached.

Are we ready to be public?

This question is one of the most difficult to answer! Our experience suggests that in the current marketplace investors are looking for some specific qualities in a newly public company

Size and Substance. Companies that are most readily accepted by investors are those with a track record of success and that show consistent revenue growth and proven earnings. There are however, some start-up companies not showing a profit that have successfully gone public. These companies have other appealing factors, such as innovative new products with a demonstrated market and a proven management team, compensating for the lack of a financial track record.

Management Team. A strong and capable management team is one of the key ingredient underwriters and investors look for in a prospective public company. Senior executives must be ready to cope with the public's scrutiny of the company's actions. They must be able to deal effectively with outside financial analysts, the financial press and public shareholders.

High Growth Strategy. The investment community is looking for companies with a record of consistently high sustainable growth. Innovative new products, proven market acceptance or being part of the new economy businesses are all factors being sought by investors.

Significant Upside Potential. Companies with high net profit margins, having a niche in the market, proprietary technologies, products or services that will distinguish their company in a competitive market, therefore having a significant upside potential, are companies that are highly attractive to the investment community.

Is the market ready? Is the stock market rising or falling? The mood of the market is critical in determining if it's the right time to go public. Many factors influence the market such as interest rates, inflation and political developments. If market conditions aren't favorable, your company will be forced to delay its offering. Although the market is beyond your control you should ensure that you are prepared and ready to act when the market is receptive.