Your private business is becoming successful at a rapid pace and now you’re faced with the opportunity to list publicly. How do you best prepare for one of the most important phases in your company’s history? If you want to ensure your success in this important venture, you’ll need to have these basics covered first.
1. Raise capital.
Before going public, your company will need to accumulate a set number of assets. For most companies, $2 million in net tangible assets is a good place to start. The exact number of assets you’ll need will depend on which exchange you’re expecting to list on since each exchange has its own set of listing requirements. The best way to determine which exchange is best suited for your company is to consult an investment bank, as they can provide insight into which exchange is the best fit for your company based on your financial prospects, scalability and growth potential.
2. Establish a business plan and equity story.
Developing a strong business plan is key to your long-term success as a public company. A good business plan will outline your potential revenue, income expectations, future plans and business strategies. In addition to a strong business plan, you’ll need to have a solid understanding of your equity story. Make sure you can clearly articulate what makes your product unique. What does your business do? Why is it important? How are you outpacing your competitors? These are all important questions to have solid answers to before applying to go public.
3. Be prepared for financial reporting and compliance.
Get your financial documents in order. Having at least two to three years of audited financial statements is typically a requirement for most exchanges, and after you go public, you’ll need to get accustomed to making your financial information available to the public. You’ll also need to make sure that your company is following the due diligence process. Your team and legal counsel will need to ensure that all material facts are accurate and that there is nothing being left out or misrepresented. Be prepared to oversee and maintain a record of your due diligence process so that you can accurately report data to your investors and the public and maintain compliance with regulatory requirements.
4. Strengthen your management team and hire investor relations.
Publicly listed companies need a highly competent management team to keep them up and running. Apart from the day-to-day operations of the company itself, you’ll need to hire an investors relations department to manage inquiries, provide investors with company information and maintain strong relationships with investors. Additionally, you’ll have to ensure your leadership team has a proven track record so that investors feel confident in your team’s ability to lead the business to success. While it’s not necessary to hire new senior leadership, bringing on a few new key players with substantial industry knowledge can reassure investors that the company is on the road to success.
These are only a few of the steps you’ll need to follow if you want to take your company public. Despite the time and effort it takes to get prepared, for many companies going public is the first phase in achieving substantial growth and making a lasting impact on their industry as a whole.
