The IPO Playbook (Book Review)

  1. Share success — Going public is the best way to reward all of your loyal stakeholders: investors, employees, and even your community. Sharing the success of a growing company is part of the journey, and great founders recognise that others contributed to the team and helped the business flourish over time.
  2. Become known globally — “Internationally, as a private company you remain largely unknown — and unproven.” Cakebread writes that being listed on the NYSE or NASDAQ legitimises you in the eyes of the world. He explains that a listing helps to create the perception that the company is a safe buy, a viable enterprise and has real staying power.
  3. Founder appreciation — Listing a company helps in generating more founder appreciation, which in turn creates more opportunities to to invent and contribute or become a founder once again. In contrast, when a founder sells the business to a bigger company, the founder inevitably leaves the acquiring company.
  4. Discipline for the future — Interestingly, Cakebread mentions that companies going through the IPO process are often surprised that the very act of putting auditing systems in place, developing the messaging and documentation in the prospectus, streamlining the organisation, and answering questions in roadshows is a very useful disciplining process. He points out that growing a successful public company requires systems, fair workforce compensation, administration, processes, etc. Arguably, such a process of ‘maturing’ as a company is good for any business, whether it ends up going public or not.
  5. Rationalise valuation — Private companies never really know their actual worth in the marketplace. Because an IPO is the subject of considerable outside analysis and carefully prepared financial tables, sets a real value on the company and stabilises that valuation over time.
Image Credit: https://www.yext.co.uk/about/leadership/steve-cakebread/
  • Billing System — The Billing System should at a minimum capture accounts receivable information (by customer and invoice), customer invoicing and integration with a quoting solution.
  • Human Resources Management System — With an HR system, ease of use and obvious workflow are crucial aspects given that a company’s entire workforce — present and future -needs to interact with it.
  • Revenue growth rates
  • Sales and marketing as a percentage of revenue
  • Product development as a percentage of revenue
  • Gross margins
  • Revenue per head
  • Operating margins
  • Cash flow per share
  • Forecasting current and future results
  • Managing your cash
  • Hiring, hiring, and hiring
  • Educating new shareholders
  • Dealing with the SEC

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