In the course of a company's life and growth cycle, there are times when it needs new capital or additional investors to
• enhance capacities,
• introduce new products,
• expand abroad,
• tap new growth areas,
• take over another company (M&A, fusion etc.),
• spin off a part of a company,
• usher in a new generation or initiate an exit (PE, VC, holding company),
• allow employees to participate in a company,
• improve brand awareness,
• optimize total capital costs or
• strengthen your capital base and become more independent.
Whereas some of the above points can also be accommodated with loans or mezzanine capital, equity is the key for all the goals mentioned above as there is no duty to pay back the raised money.
In the search for equity, a company has the following two options: private or public equity.
In both cases, the company management should realize in advance that external investors demand in-depth information and regular contact. For the company this means extra reporting duties and enhanced transparency needs. Moreover, investors want a significant say in developments.
If the company is prepared to do so, all corporate data has to be analyzed to determine whether it is ready for flotation (public equity) or whether a private investor is needed for a given period to help it reach this threshold in the medium term. However, the latter will also want to seek an exit after a certain time, which can also result in flotation.
Thanks to a precise analysis of external information (peer group, stock market environment, competitive situation, etc.) as well as all internal corporate data (such as organization, management, strengths and weaknesses), IR CONSULT is able to determine exactly which option is the best for the company at the given time. Initial valuations are made to ascertain whether the price envisaged by the management or shareholders is in line with the temporary stock market environment prevailing at the given time.
This flotation eligibility test (http://www.boersenreif.com/) is relatively straightforward and should definitely be conducted before anything else in order to eliminate and misconceptions that may exits, identify any weak points and get a clear idea about a possible IPO at an early stage.
In this way, such unnecessary costs can be saved as would be incurred if it not noticed until a later stage in the project that homework still needs to be done and the IPO has to be postponed.
IR CONSULT can provide you with competent and detailed answers to these questions requiring clarification prior to the IPO.