How quickly the sentiment on the Stock Market changes can currently be observed on an almost daily basis. Heightened uncertainty has been reflected in low transaction activity and weak aftermarket performance globally, followed by phases of quick recovery. Therefore, it is important to be ready for the next IPO window when the market returns.
2025 started with a mix of optimism and caution in global capital markets. While the first few weeks of the year saw a solid pace of IPO activity worldwide, various factors such as persistent inflation concerns, evolving AI market dynamics and government actions caused a more unstable environment for global trade and an environment of heightened uncertainty. This put capital markets under pressure and weighed heavily on investors’ willingness to engage in new equity issuances. Many potential issuers and owners have been dismayed at the chances of a successful capital market debut.
However, while this downturn has been caused by political and economic uncertainty, making it different from previous crises, such as the financial crisis in 2009 and the beginning of the COVID-19 pandemic in 2020, it is not the first crisis in the IPO market. Experience shows us that the question is not “if” the IPO market will re-open, but merely “when”. In the future, favorable market phases might be shorter and more unpredictable than after past downturns. Therefore, once the market returns, companies planning an IPO must be ready to execute their transaction quickly. Otherwise, they risk missing a positive issuance window, allowing others to attract investors’ attention first.
Companies are well advised to start their IPO planning early and independent of the situation in the capital markets. This will give a private company time to build the capabilities to think, act and perform as a public company and be ready when the market returns.
Early planning
There are various options for approaching the capital market (IPO, spin offs, direct listing) and management should consider their options when developing their goals in order to choose the most beneficial way to list the company. Relevant questions for management and owners include:
- Does your company have an attractive Equity Story and is it based on reliable and reproducible facts and data?
- How much capital does your company need before and after going public?
- Which investors do you want to attract with your offering?
- Do you have a realistic timeline for the IPO which includes the preparation of high-quality information for inclusion in the prospectus? Can it be accelerated, if a favorable market window opens?
- Do you have reliable processes and procedures in place to produce high-quality financial and operational KPIs as well as robust forecasts?
- What steps are required for your company to be ready to be a public company (e.g., financial reporting, controls and processes, sustainability reporting)?
- What measures need to be taken in order for your company to be fully prepared for the rules and regulations that come with a listing, but also with the demands and requirements of professional capital market investors and the public?
Especially in times of high uncertainty, investors will focus on core elements, such as a resilient business model and stable returns with a proven track record.
Going public requires management to be prepared to meet shareholder and market expectations from day one. This includes addressing ongoing compliance and regulatory requirements, increasing operational effectiveness, speeding up periodic reporting as well as establishing investor communication.
Getting prepared
During the IPO process, companies often struggle with the requirements to complete the transaction, prepare for the ongoing obligations of a public company and drive business growth.
Therefore, companies are well advised to objectively assess their readiness for going public and life as a public company well in advance of the IPO execution process.
In our Readiness Assessment we analyze your company’s status quo in relation to a comprehensive set of readiness areas. Where we identify any shortcomings, we provide concrete recommendations as to their remediation, including proposed priorities. This allows management to estimate time and effort, set priorities and implement measures to remediate any deficiencies. As such, the Readiness Assessment is management’s starting point to develop a realistic project plan and identify and allocate necessary internal and external resources in order to increase operational maturity and ultimately prepare for a self-defined capital market roadmap and full capital market readiness.
Life as a listed company
An IPO is only the beginning. For a successful capital market entrance, a company must act and function as a public company, both internally and externally, from the beginning.
For a successful capital market entrance companies need to:
- Be able to provide investors with timely and accurate forecasts and communicate expectations and key KPIs;
- Be ready for frequent communication with investors, analysts and the media to ensure that the company’s story is portrayed accurately as public perception can have a direct impact on share value.
An early start is the key to a successful IPO, especially in times of increased uncertainty, which we expect to continue in the medium term.
Are you considering an IPO as a way to secure the future of your company? Our specialized and industry-experienced team can assist you in all phases of the IPO process. We help you evaluate the pros and cons of going public, guide you through the listing process and prepare your company for life as a public company, regardless of which market you choose. In doing so, we can provide support with all structural, operational and regulatory issues that may arise along the journey.
We will help you understand what you need to know and what you need to do to make your IPO a success.
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