Page 142 - Initial Public Offering - An Introduction to IPO on Wall Street

It would be sensible for private firms to recruit the required back office and administrative
support personnel well ahead of a public offering considering the growing accounting standards
for public companies. Also, reconstituting the board of directors is strongly advised,
prioritizing diversity and individuals with complementary skills and a reputation of a strong
personality.

Wall Street Preparedness

For management teams to get started on the right foot, they must have faith in their capacity to
predict sales. As a public corporation, missing quarters and restricting guidance soon after
going public is the easiest way to lose goodwill with public investors.

If a business has a hard time predicting sales and expenditures as a private entity, not entering
the public markets until the model's forecasts improve is advised. On the other hand, if the
business has a high level of predictability, the emphasis could turn to create a succinct message
about the growth strategy of the organization. In doing so, it is advised that businesses evaluate
their total addressable market (TAM) at a high level, by using reputable third-party sources.

Finally, this goes without saying but when engaging with public investors for the first time, it
is important for management teams to be as ready as possible. During their first meeting with
a CFO or CEO, an investor is unlikely to have a long list of specific queries. Instead, most
discussions are high-level to convey an understanding of the overall organization and the
executive team.

Management teams are encouraged to commit to intense Q&A preparation sessions so that they
can make a good first impression. This planning will pay off greatly as it will provide CEOs
and CFOs with the confidence boost they need to narrate the story of the business in an
impactful way, saving a lot of valuable time in the process.

Changes in Model and Valuation

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