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Going the IPO-route is an extremely crucial decision in the life cycle of a company and also for its owners, promoters, venture capitalists and/or angel investors who have helped build the foundation of the company.

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10 5 2017

10/5/2017

10 Ways to Get IPO Ready | Your Retail Coach

10 Ways to Get IPO Ready Part-I | YRC

Aug 22, 2017

Going the IPO-route is an extremely crucial decision in the life cycle of a company

and also for its owners, promoters, venture capitalists and/or angel investors who

have helped build the foundation of the company. IPO (initial public o?ering) is a

crucial decision because it is done with certain strategic and particular objectives

in mind. And once the decision to go for an IPO is ?nalized, after consideration of

the available alternative options and the pros and cons of going IPO; the next

foremost task in hand for the management of a company is bracing itself up for

the IPO. This article will attempt to highlight ten important moves which can prove

to be very helpful to companies in their journey of getting ready for an IPO.

To know more about the basics of IPO, click here – What is an IPO?

Move 1 – Know the Rules

Every country has a regulatory framework of its own which governs the process of

IPO. In India, SEBI (Securities and Exchange Board of India) is the regulatory body

for the securities market in India (1). These regulatory bodies de?ne the

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conditions and procedures for the IPO process and every company intending to

raise money from the public in the form of shares and other forms of securities

have to comply with these rules and regulations. There are a whole lot of

documentation and o?cial formalities involved. It becomes imperative for the

companies to acquaint themselves with the rules and regulations governing the

IPO process so that they can prepare accordingly.

These regulatory bodies de?ne the conditions

and procedures for the IPO process and every

company intending to raise money from the

public in the form of shares and other forms

of securities have to comply with these rules

and regulations

Move 2 – Build Your Internal Team

Launching an IPO can be a lengthy, time-consuming and professionally technical

process for companies. Understanding of the rules and regulations governing the

IPO process, incorporation of the necessary changes in the company and

implementation of the compliance measures may require a highly competent and

dedicated team in the organization to handle and execute the IPO process.

Preparing a company for an IPO gives rise to several new and additional

responsibilities in various areas like ?nancial management and accounting

standards/procedures, legal and procedural documentation, investor relations etc

which may require a dedicated and professional team in the company that can

primarily focus on the IPO process.

Understanding of the rules and regulations

governing the IPO process, incorporation of

the necessary changes in the company and

implementation of the compliance measures

may require a highly competent and

dedicated team in the organization to handle

and execute the IPO process

Move 3 – Hire External Professional Services

External advisors/professionals play a crucial role in the planning and execution of

the IPO process for companies. These external professionals include the

underwriter, independent auditors, lawyers, professionals to manage media,

public and investor relations, insurance brokers etc. Each of these professionals

plays a vital role for the companies in their IPO journey. Some of the key

responsibilities executed by the external professionals include structuring of the

IPO for retail and institutional investors, pricing decisions, the performance of

independent audits and evaluation of compliance with the accepted accounting

standards, addressing legal compliance and litigation issues, ?nancial risk

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10 Ways to Get IPO Ready | Your Retail Coach

management, coordination with the o?cials of the concerned stock exchange etc.

(2)

The key responsibilities executed by the

external professionals include structuring of

the IPO for retail and institutional investors,

pricing decisions, the performance of

independent audits and evaluation of

compliance with the accepted accounting

standards

Move 4 – Organize Your Records

There are several statutory preconditions pertaining to the books of accounts

being maintained, accounting standards being followed, ?nancial reporting

mechanism in place, taxation compliance, o?cial record maintenance etc which

have to be met by the companies intending to list themselves on a stock exchange

for the ?rst time via IPO.

Accounting standards being followed,

?nancial reporting mechanism in place,

taxation compliance, o?cial record

maintenance etc which have to be met by the

companies intending to list themselves on a

stock exchange for the ?rst time via IPO.

The past ?nancial performances, standard and level of transparency maintained

in accounting and book-keeping procedures, accuracy in ?nancial reporting and

taxation compliance etc of a company are crucial parameters for several

stakeholders like statutory bodies and potential investors. Shady record

maintenance can prove to be unfavorable to companies and may create

complications in obtaining the approval for IPO.

Move 5 – Improve Internal Processes

Unlike private companies, public companies are required and expected to

function in a much more transparent manner and are also subject to more

stringent compliance measures in order to protect the interest of the investors

and other stakeholders involved. Along with transparency, public companies are

also expected to operate maintaining high standards of professionalism and

competency in every department of business management – corporate

governance, ?nancial management, HR & IR, IT, quality control, statutory

compliances etc.

Public companies are also expected to

operate maintaining high standards of

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professionalism and competency in every

department of business management

To attain the stature of a public company; to live up to the expectations of the

investors; and to have internal systems which could facilitate statutory

compliance, companies often have to bring major overhauls in their internal

business processes with organizational restructuring most likely on the cards.

Move 6 – Investor Relations

Before an IPO is launched, it is important for the companies to create the

awareness and generate interest for the IPO in the market amongst both retail

and institutional investors. Going beyond promotional e?orts, companies should

strive to build the foundation of investor relations right from the early stages.

Strong investor relations and communication policies could help companies

ensure that the potential investors and other stakeholders remain well-informed

and updated about the prospects and performance of the company in terms of

business activities, ?nancial results, workforce management, corporate

governance, leadership, compliance, CSR etc.

Before an IPO is launched, it is important for

the companies to create the awareness and

generate interest for the IPO in the market

amongst both retail and institutional

investors

Author Bio

Rupal Agarwal

Chief Strategy O?cer

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