What is an IPO Advisor: Meaning
What is an IPO advisor?
Among many other ways of raising funds and going public, issuing an IPO is the most popular one. However, it is a complicated and time-consuming process requiring plenty of formalities to be fulfilled.
Without the assistance of experts, non-compliance with laws may land the company in unwanted circumstances. Not only that, an IPO strategy has to be formed before the commencement of the process.
To cover all the critical aspects related to the Initial Public Offering, the IPO advisor has a crucial role to play.
From preparing a roadmap for the process to the post-issue stage, IPO advisors help you mitigate challenges and risks through their expertise and experience.
Let's learn about IPO advisors in the blog in detail.
What is an Initial Public Offering?
An Initial Public Offering is a process through which privately held companies shift to a public enterprise.
Any company that decides to issue an IPO has several reasons behind it. Whether it's growth, expansion or paying off debt, IPO is a popular option to raise additional funds.
Though it is a common way to raise funds, it is a time-consuming, lengthy and technical process and can only be done with the support of external parties.
Founders have business skills, and management has managerial skills. Hence, companies have to hire experts to act as a catalyst in the process. And an IPO advisor is one of those catalysts.
What is an IPO advisor?
An IPO advisor is an expert that aids a company through its IPO process. Since private companies have no history of issuing shares in the past, they require external experts' help.
An IPO advisor helps companies in the fields of finance, operations and many others. Since environmental factors play a huge role in a company's IPO's success, an IPO advisor also checks these factors.
Moreover, non-compliance with the rules and regulations of the laws can land companies in unwanted or unexpected situations. Here too, IPO advisors come to the rescue.
Simply put, IPO advisors are investment banking firms assisting companies in raising funds smoothly.
What do IPO advisors do?
Right from the beginning of the preparations for the IPO till the process ends, advisors perform a bunch of services.
Let's have a look at their services throughout the IPO journey;
Evaluation stage: The beginning stage of the IPO is the evaluation stage. The IPO advisors perform several services during this stage, such as developing a business plan, discussing crucial aspects with auditors, etc., preparing IPO workshops, etc.
Assessment stage: Next comes the assessment stage. Varied services performed by advisors during this stage are checking for IPO readiness, project planning, GAP analyses, roadmap preparation and others.
Execution: Moving forward, advisors have a crucial role to play in the execution stage. The services provided are preparation of form S-1, getting SOX ready, audit transformation, reporting, and more.
Sustenance: After the execution of the IPO process is done, an IPO advisor performs numerous services. They are tax compliance, checking on resources, maintaining investor relations, complying with new accounting standards, etc.
Others: There are a bunch of other activities practiced by IPO experts. They are:
- Explore possibilities of IPO
- Recommend technology to be employed
- Perform risk assessment of the business
- Provide a roadmap for risk alleviation
- Develop technical memos
- Financial planning
- Project future growth
- Discuss the use of proceeds
- Arrange for due diligence
How can IPO advisors help businesses?
Looking at the services performed by IPO experts, a business can benefit from them in countless ways.
Let's have a look at how a company's IPO journey gets accelerated by IPO experts.
Developing an IPO strategy
Starting without having a well-defined strategy leads you nowhere. It results in a waste of time, money and resources.
An IPO advisor helps you formulate an IPO strategy that works as a roadmap. It includes defining IPO goals or objectives, predicting the potential of a business, etc.
Identifying gaps and suggesting remedies
Any gaps in the IPO process, for example, insufficient resources, can cause hindrances in the process. Such gaps need to be eliminated.
IPO experts aid you in identifying such gaps in the process and suggest remedies to fill them.
The process of initial offering is highly complicated. It can distract businesses from their core activities.
IPO advisors relieve you from such complexities that may occur while managing different stakeholders, shareholders, employees, etc. Hence, you can focus on vital aspects of the business.
Furnishing essential information
The initial Offering process requires a business to maintain and submit a lot of documents. For these documents, extensive information is required.
IPO specialists help businesses to collect and analyse such information leaving them at ease.
Getting on a roadshow
It is a way through which companies or businesses issuing IPO reach out to potential investors. IPO consultants help brands to present their offer to investors through presentations, promotions, etc.
Complying with rules
One of the biggest mistakes a business can commit is going against the laws and regulations.
IPO advisors help companies comply with the laws' rules and regulations due to their expert knowledge in the field. Hence, the company won't have to worry about such mistakes.
Hiring the right people
Businesses in the growth stage require the right people with progressive mindsets. Wrong people will waste time, energy and resources.
IPO advisors assist you in your hiring process by choosing the right people (CFO, CS, etc.) with high potential to grow your business in future.
Be it any stage of the IPO, whether pre-issue or post-issue, IPO advisors offer a wide range of services to streamline the process.
Companies must hire experts in the field if they wish to focus on their core business without worrying about the complicatedness of the process.
Different advisors may provide different services depending on their expertise. Hence, you must choose one after careful evaluation.