Taking your company public
What to look out for
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When is my company ready to go public?
A company’s readiness to go public used to be measured by criteria such as sales,
profitability and other similar ratios. One of the main indicators of a company’s readiness for a
listing is its outlook for future development. The checklist given in the section below helps you
to assess your company’s readiness for a public listing.
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What are advantages of going public?
The first advantage of an initial public offering is, of course, raising equity
capital. An initial public offering is the ideal way to raise the equity capital needed to finance
promising projects for tomorrow’s growth. A pleasant side-effect is the high interest shown
by the media that the IPO generates.
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What do I need to take into consideration?
An initial public offering involves a number of changes within the company, which
might be perceived as a disadvantage by the company or the owners. Among the special requirements
that must be met are the disclosure and reporting obligations imposed on listed companies. The
publication of quarterly reports and annual reports in the required scope, the preparation of a
corporate calendar of events, the organization of press conferences and meetings with analysts,
etc., do not only involve time and work, but also cost money.
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What steps do I need to take?
An initial public offering is a strategic decision that calls for extensive preparatory
measures. The preparation of an issuing concept that takes account of all of the steps of an
initial public offering and also defined the structure of the IPO itself such as type and number of
shares, market segment, etc. is very important.
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How long will it take?
IGenerally, the timeframe is around six to twelve months. How fast an initial
public offering is actually carried out depends on the correct assessment of the company’s
readiness for a public listing and the commitment of the owners and of the management. Although
external consultants prepare the going public in detail and thus also the decisions that need to be
taken, the management and the owners should keep their time free for several weeks before the
IPO.
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What does an IPO cost?
The expenses of an initial public offering are made up primarily of the costs of
transforming the company into a stock corporation, the costs of a capital increase, the fees for
the placement of the shares and the costs of financial communications activities. The largest
expense item is the commission charged by the bank acting as underwriter for the placement of the
shares. Generally, the total costs of a listing may be stated at around 5% to 10% of the issuing
volume.
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What price can my shares ask?
The most important measure of the value of a share is the price-to-earnings ratio.
The offer price of the share is determined in agreement with bank acting as the underwriter.
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Which experts are of help?
The task of carrying out the initial public offering and providing the consulting services
needed are offered either by expert consultants for IPOs or by the bank selected to act as an
underwriter. Additionally, it is recommended to engage external consultants such as auditors, tax
advisors and financial communications agencies.
