Going public is a significant milestone for any fast-growing business. Preparing for an IPO can often be a long and complicated process, but having the right tools in place to support the process can be immensely helpful.
In fact in 2020, 70% of technology IPOs in US run on NetSuite:
Check out these 7 ways NetSuite can help your company raise the odds of IPO success.
1. Get a solid financial foundation in order
When planning on making an IPO it is essential to have a strong and comprehensive financial foundation in place before starting the process. Choosing a unified business platform is recommendable since the use of several separate systems may become more costly and require a lot of manual work down the road. Regulatory requirements can also prohibit the company from changing any financial systems during the IPO process and the year following it (note that requirements may vary in different countries). A company which does not have a system in place that provides appropriate and real-time access to critical financial data will have a harder time succeeding with their IPO.
Companies looking to go public must be prepared to provide three years of audited financial data, which requires a system capable of providing that.
Investors will want to see:
- solid debt-to-equity rations
- sufficient market capitalization
- predictable revenue and earnings streams
IPO candidates must also be capable of handling modern accounting challenges, such as asset valuation impairment, consolidated subsidiary financial statements issues and revenue recognition.
NetSuite ERP is a cloud-based business platform which offers all core business functions within the same system. It provides financial data and real-time insight into the company’s standing, as well as tools and capabilities to navigate complex challenges.
2. Prepare for rigorous financial reporting
The IPO process is greatly helped by the accurate and efficient production of financial statements, meaning there is significant value in investing in systems and automation that support global consolidation and financial reporting. By eliminating manual data entry, a company can scale more effectively as the business grows in volume or complexity. By ensuring that the reporting processes are transparent and supported by audit trails, a company will earn dividends throughout the IPO process and after.
Furthermore, it is important that companies starting the IPO process have robust management reporting capabilities. This requires the ability to analyze past performance and predict future performance, and thus requires investments in business intelligence and analytics.
NetSuite ERP provides the robust reporting and analytics that companies need to establish practices with automated reports around key performance indicators (KPIs), role-based dashboards and the ability to drill down by department, location, or subsidiary with a platform that lets even inexperienced users perform complex analytics.
3. Establish good corporate governance
Going public by making an IPO requires strong corporate governance. Therefore, companies that are considering starting the IPO process should establish a governance framework that keeps board members and executive management accountable in regard to their roles and responsibilities. The time and effort required for this process should not be underestimated, neither should the importance it plays in long-term success.
When a company enters the public market, regulators and investors will demand coordination, transparency, and consistency, unlike the loose policies and casual atmosphere that can be found in many private companies. In the public equity markets, governance is not optional, and each executive and director must be aware of how they relate to each other, to the company, and to the stakeholders.
NetSuite ERP provides tools and capabilities for governance, risk, and compliance. This gives companies confidence in their reporting and auditing from the start-up phase all the way through the IPO process and beyond without having to change systems. Automated controls and access based on role also provides security within the financial system.
4. Establish investor relations and corporate communications
Investor relations play a big part in preserving the company’s reputation through ups and downs. Once a company goes public, it becomes an open book to all and the object of public scrutiny. The number of stakeholders will increase, and a well-functioning investor relations (IR) department will act as a gatekeeper, ensuring that the company is communicating effectively with the financial community. A strong IR department backed by accurate metrics can provide a clear picture of the business. However, this requires having the infrastructure in place to have these metrics ready at hand.
NetSuite ERP provides rapid access to financial metrics and reports, and provides companies with the capabilities needed to build a strong IR department that is well-informed and prepared to take on public-market scrutiny.
5. Develop risk management capabilities
Going public introduces significant risk to the company. It becomes more accountable to wider range or investors and regulators, especially when performing poorly. To be able to see any potential problems before they emerge can mean the difference between long-term success and bankruptcy. Aside from ensuring that the legal department or council has a strong voice and that protective policies are in place, a public company needs to be able to respond when an audit committee or the board of directors questions management expenses, major costs, cash access or forecasting.
NetSuite ERP provides access to real-time KPIs and automated rule-based alerts that identify risks before they become problems. With these features in place, company leadership can make educated decisions and help preserve the company’s integrity.
6. Have the right people on your team
An IPO process requires an experienced team that works well together and knows how to navigate the public equity market. Management credibility and experience may very well be the most important non-financial factors for IPO success. Most important is the financial organization, which must adapt to rigorous reporting requirements, among other regulations. The demands of the IPO process will require the full attention of the CFO for months, leaving the financial organization in need of a strong controller to take the reins.
7. Know your company’s story and how to tell it
Once a company goes public, how to tell the company’s story becomes of greater importance. Being able to articulate everything from product roadmap to brand identity and growth objectives plays an important part in keeping all stakeholders informed and confident that the company is moving in the right direction. It is critical that the company’s leadership are able to tell the company’s story, and are able to back it up, which is where having a strong IR and communications team ready to jump in comes into play.
NetSuite ERP provides company storytellers with the financial performance and KPI information that they need to tell the company’s story, to answer questions, and to deliver both good and bad news in a way that boosts confidence within public markets and enhances future market value.