As a company grows and grows, one of the most important decisions that the shareholders will ultimately have to make is whether to go public or not. If the shareholders decide to go public, they will further have to decide the best option to use while going public. There are basically three options. The simplest and cheapest option is to merge with an existing public company with low stock prices. After merging with the public company, the new entity will start trading in the open market at market-valued stock prices.
The second option is the traditional IPO, where the shares of a company are offered to the public at a predetermined price, normally referred to as the offer price. The last option is a private placement, where the shares of a company are offered to a select group of investors who bid for the shares. Only the best bids are selected, thereby giving the company a market valuation. If you opt for an IPO, it is recommended you hire the best IPO advisory firm to help you with the process.
Choosing an IPO Advisory Firm
Since there are many advisory firms or consultants in every city, it can be challenging to identify the best consultant for your needs. What you can do is make a shortlist of the top-rated IP advisory firms and compare them based on the following factors:
The number of IPO’s an advisory firm has seen companies through is perhaps the most crucial factor of consideration. You are looking for a firm that has been around for many years and has helped dozens, if not hundreds of companies from around the country to go public. Experience is crucial when going into something you have no clue about. Be sure to also check the sizes of the companies a firm has helped as well as the industries they were in. Ideally, you should give special consideration to advisory firms that have worked with firms in the same industry as you.
The reputation of an IPO advisory firm can have an impact on the subscription rate of the IPO. If you want a high subscription rate, be sure to hire a firm that has a great reputation in the industry. Be sure to go over client reviews and check how the shortlisted firms have been rated and ranked by their previous clients.
It is crucial you compare the service fees charged by different firms. After all, you do not want to incur other costs in addition to the IPO fees charged by the securities exchange. Since different firms will most likely quote different rates, a comparison will most likely save you and your company a lot of money. Fortunately, intense competition has led to competitive pricing.
The most important function of IPO advisory firms (visit us here) is to advise you on the timing and pricing. Since they can get one or both of these wrong, only firms that are fully insured and bonded should be considered. You want your IPO to be successful and record at least 100% subscription rate, so you need to obtain guarantees from the shortlisted service providers.