By Michael Briggin
According to TIME Magazine, in 2021 a record number of more than 900 companies filed for IPO.
https://time.com/6130396/biggest-ipos-2021-rivian-volvo/
However, taking a company public is more than just hype. It’s a serious decision founders and CEOs alike face if they want their enterprises to grow and be influential in the world.
Here’s what you should consider if you’re thinking about an IPO:
Is An IPO Needed?
Although the drive to be a publicly traded company can produce dividends and allow employees to buy into stock, not all companies file for IPOs. If you think these organizations are crazy, understand that it’s still possible to profit without being a public company.
BMC Software, Fidelity Investments, Meijer, Panda Restaurant Group (owners of Panda Express), Petsmart, and Staples are examples of private companies who have been in business for years without being publicly traded. Annual revenue for all three companies in 2020 was more than $3 billion.
Know The Risks
Being public can bring tremendous financial rewards with raising capital along with the ability to add influence as a leader in your target market(s).
At the same time, if you’re a publicly-traded company, the Board of Directors and shareholders will add pressure and you will need to be able to manage their expectations along with those of your customers, fellow executives and employees. Unlike being a private business, as a public organization you will have to report to your shareholders on revenue goals more regularly than you used to.
Additionally, in preparation for an IPO, don’t lose focus of your core values and mission. Although being a public company will change the landscape for your business and for the economy, there’s a risk in putting too much pressure on your employees in the process.
It’s Not The End of The World If You’re Back As a Private Company
No, this isn’t about filing for an IPO and then leaving the NASDAQ after a few months or anything rash. This means that if there’s a strategic reason to being private, doing it as a last resort can give you more freedom to make creative decisions without the influence of shareholders.
Dell went back to being a private company in 2013 after dealing with pressures of short-term growth and a changing consumer technology market. Levi Strauss, while now publicly-traded, has only been so for the last three years and beginning in the 1980’s went private, staying that way for decades.
Conclusion
There is no right or wrong when it comes to filing for an IPO or not. Timing matters more than anything but as long as you have your organization’s best interests that’s what counts.
Ultimately, there should be a good strategic reason you should aim for it as opposed to simply doing so for an ego kick.
