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Timing Is Everything: Poll finds that timing the market biggest obstacle to IPOs

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Timing Is Everything: Poll finds that timing the market biggest obstacle to IPOs

Companies underscore market uncertainty and building the right team as major roadblocks to IPO readiness in the slowest IPO market since 2009.

A new poll from professional services firm Deloitte shows more than one-third of companies view timing the market as the biggest concern when considering an initial public offering. Reservations about building the right team and business infrastructure ranked as the second leading concern. Overall, companies are optimistic IPO activity will increase over the remainder of the year.

"For emerging growth companies, IPOs are pivotal for expansion, and a poorly-timed offering can be incredibly difficult to overcome," said Heather Gates, managing director and West region emerging growth company practice leader, Deloitte Services LP. "Investment bankers keep a close watch on overall market volatility to try to select the best time for a company to go public. Lower market volatility tends to produce better results and a greater number of IPOs."

"For emerging growth companies, IPOs are pivotal for expansion, and a poorly-timed offering can be incredibly difficult to overcome."

According to Gates, in addition to timing the market, more than a quarter (28.7%) of respondents ranked building the right team and business infrastructure as a major challenge. Having strong people, systems and processes in place that can withstand the rigors of the IPO process should be top of mind for companies.

"Companies can pave the way for success by focusing on accounting, financial, legal, business and systems matters at least 18-24 months in advance of going public.  Often, companies wait too long to bring on a professional management team, creating a last-minute scramble that may result in missing opportunities and risking long-term success," said Mohana Dissanayake, partner and audit technology industry practice leader, Deloitte & Touche LLP. "Assembling a strong business infrastructure, investing in the right finance personnel, and building the right team are crucial not only for the initial offering, but for establishing credibility in the eyes of investors in subsequent quarters."

Executives also cited attracting the right investors and analysts (20.4%), and to a lesser extent, advance planning and early adoption (10.1%) as major challenges in their decision-making process. Despite the obstacles, more than 34% of respondents say IPO activity will increase moderately this year.

 

 

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