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Biggest Mistakes To Avoid When Getting An IPO

Taking a company public is the dream of many entrepreneurs. However, if you search the statistics, you are likely to find hundreds of examples of failed initial public offerings (IPOs). 


In fact, by relying on experts, such as an audit firm in Malaysia, for professional pre-IPO advisory services, companies can significantly increase their chances of being successful in their IPO. 


The goal of this article is to discuss some of the major mistakes you must avoid when getting an IPO.  


Lack of an experienced team

An IPO is bound to affect every department and working procedure of a company. As a result, it is important to have the right teams working across the organization to make the IPO process successful. 


The roles of these teams or team members can vary as per the department in which they work. Some of the critical areas you should focus on are:

  •  Having an experienced finance team to create an automated system for the production of accurate financial reports can be the make-or-break factor of most IPOs.
  • Make sure you have a standardized accounting and auditing system in place to handle finances during and after the IPO.
  • Modern tools and technologies should be used to set up a reliable control environment with comprehensive and easy-to-understand documentation. 
  • You must have a strong legal team to deal with the numerous aspects of an IPO. Keep the legal team intact even after the company has gone public. 

Lack of Understanding of the IPO's Intent

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Once you make the decision to go public, you have to realize the intent of the IPO and have a reliable starting point. Professional IPO readiness assessment plays an important role in it. 


The intent of the IPO basically means why you are going through the extensive IPO process and what you will achieve by the end of this process. It will help you align the company goals and internal teams with the end goals. 


Moreover, it is important to be fully familiar with the current state of the company so you can chart out a successful path to complete the IPO process in the best way possible. An audit firm in Malaysia can help you with thorough business analysis and IPO planning. 


Over Promising

Companies that start the IPO process without proper planning tend to over promise on milestones to get the IPO completed. 


This can result in severe complications in the post-IPO phase of the company, especially when the company’s management is not able to achieve the milestones within 12 months of the IPO. 


The best way to avoid this issue is to rely on experts for pre-IPO advisory services, make sure that the company is ready to go public, and set realistic goals to achieve within a specific timeline. 

Lack of transparency

IPOs have a great impact on every department and level of an organization. Therefore, it is critical that you ensure maximum transparency in communication between all the stakeholders of a company. 


You have to make clear and comprehensive guidelines about the IPO process and make sure proper controls are in place to implement these policies. Moreover, the communication process should evolve with the progress of the IPO. 


The initial stage is typically focused on the intent of the IPO and the end goals you are expecting from the IPO process. 


Later on, regular communication with the experts and regulatory boards becomes important to ensure all of the stakeholders are on the same page to make the IPO successful. 

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Lack of readiness

There are a large number of mistakes that can make an IPO a failure, but the most common is a lack of readiness. 


A lot of companies make the mistake of going public without proper planning and doing the required research to create realistic goals. 


Hence, it is important to rely on professional audit firms in Malaysia to analyze your business and help you make achievable growth goals through an IPO readiness assessment.


These professionals can guide you throughout the IPO process and make sure you have all of the relevant and up-to-date information about taking your company public. 


They will also help your organization prepare for fluctuating market conditions, so you should definitely rely on the experts for their advice and expertise in IPOs


The bottom line is that an IPO can certainly be a complicated task for companies, especially because it comes with various risks. Nevertheless, with proper planning and pre-IPO advisory services, you can ensure that an IPO is the right path for your business.