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By many accounts, 2018 was a good year for companies that launched an IPO and for many investors who bought stock in these newly public companies. In our 2018 Annual Capital Markets Watch, we reported that 2018 saw more than 200 offerings for the third time since 2008. In total, 214 IPOs raised $54 billion, indicating strong interest from the investment community in IPOs. In addition, 2018 was the strongest year for these offerings in four years. The first three quarters of the year had strong volumes with 18% of IPOs pricing above their ranges.
But what makes an IPO successful or not? There are definitely many degrees of success. Here are some of the ways to measure the success of an IPO:
There are many ways for a company going public to attract investors to its IPO. Generally, a company that has higher growth than the industry average will attract investors from the buyside. Investment bankers seek out companies that can fulfill several criteria to boost the chances for a successful offering and solid performance in the aftermarket. Here are some elements that can make the IPO more likely for success:
Planning, executing and managing an IPO is a complex task for any organization. The better prepared a company is, the more efficient and less costly the process can be. While the planning process for an IPO can start the day a company is incorporated or as late as months before a public offering, we recommend that an orderly plan be executed over a one- to two-year period. This window gives a private company time to build the capabilities to think, act and perform as a public company.
The preparation process can often be lengthy, depending on the maturity of a company’s existing processes. It is vital that the company understand and address any gaps and secure the success elements listed above before going public.
In our experience, a successful IPO has three equally important elements:
To get more information about these three stages and how to prepare for and enable a successful IPO, read our in-depth report, Roadmap to an IPO: A guide to going public. If you’re in stage one of the IPO process, see our resources around how to conduct a thorough readiness assessment.
When you are pursuing an IPO, having an advisor with the right experience and insight can make the difference in helping you achieve your objectives. At PwC, our unique vantage point allows us to spot opportunities to help advance your strategic agenda. Our deals strategy, Capital Markets Advisory and execution and implementation professionals not only give us a holistic and deep knowledge of your business, but also insights and ideas across sectors and geographies.