Going public or staying private
The road to IPO can be tedious and must be evaluated and prepared in advance. The first step an IPO-aspirant should take is to evaluate whether the company is ready to withstand public scrutiny and whether it can meet the standards and performance expected of a listed company. There are many pros and cons that cannot be ignored, including those listed below.
Advantages of IPO
· Ease of raising funds for expansion, providing an alternative to bank loans.
· Realising shareholder worth – Becoming public is a good way of realising investments for existing shareholders.
· Image – Creates an enhanced image for the company while also improving public perception on the company.
· Publicity – A public sale of stock creates visibility. These are beneficial in promoting your businesses. This can often times result in new businesses while serving as an attraction for prospective business partners or merger candidates.
· Mergers and acquisitions – The listed company's stock is effective for funding and can be used as a mode of payment for acquisition transactions.
· Share option scheme - A listed company can created a more meaningful employee share option scheme to help attract and retain talent.
Disadvantages of IPO
· Less decision making flexibility – Public companies are accountable to public shareholders and the stock exchange. Many information that were confidential in the past must now be disclosed.
· Divident and profit pressure over the short term – The management team are under pressure to deliver profits and dividends consistently.
· Time consuming – Transforming into a public company can be cumbersome and lengthy.
· Vulnerable to unwelcome takeovers – Public companies are subjected to hostile takeovers since their stocks are tradeable.
· Compliance costs – Public companies need to comply with added reporting requirements to the SGX while also conforming with industry best practices and legal obligations. These compliance costs are not cheap.
Decided to go IPO?
Pre-IPO preparatory work must be done prior to embarking on the IPO road. This includes assessing the company's growth prospects, beefing up the management team, strengthening its financial position, tightening its internal controls, improving operational efficiency, addressing problems and resolving issues that may adversely affect the listing.
We work closely with the management to determine the best time for the exercise, provide the necessary assistance and guidance through the entire process. Our services include:
· Pre-IPO review – We assist the company to assess its listing feasibility, restructuring for IPO, provide indicative valuation based on the prevailing market conditions and assist in developing IPO strategy and IPO planning.
· IPO Preparation – We can assist in compiling the information required for the Prospectus and manage, coordinatete the IPO process
· CFO appointment – Going for IPO requires the company to appoint a CFO that meets the stock exchange requirements. Our professionals are suitably qualified and can be the designated CFO for the company on a contract basis.
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