Pre-IPO Questions to Ask When Considering Going Public in Malaysia
Taking your company public either through a traditional initial public offering (IPO) or SPAC can be a complicated process.
In this article, we’ll discuss some of the most important pre-IPO questions that you must consider before making your company public in Malaysia.
1. What are the management plans?
It is important for the company executives and management teams to make sure they have clear and concrete plans about how to take the company forward after making it public. Investors are always on the lookout for good investable companies, but they are also quite skeptical of the newly listed companies due to heavy competition.
Therefore, the management must be ready to explain the company’s unique selling points and competitive advantages to convince the investors about the ways in which the company will grow after the IPO. It will ultimately facilitate the company in getting more investors on board.
2. What type of market should the company choose for listing?
There are three types of markets in Malaysia where you can list your company. These markets are:
This is the perfect market for well-established companies that meet the highest possible quality and operation standards. Companies listed in the main market are easily accessible to the public.
ACE (Access, Certainty, Efficiency) Market
It is a sponsor-driven market accessible to public investors. Generally, fast-growing businesses tend to go public in the ACE market. It is better to conduct a thorough IPO readiness assessment before going public on the ACE Market.
LEAP (Leading Entrepreneur Accelerator Platform) Market
Another popular market for public companies is the LEAP market. It is a highly adviser-driven market that welcomes all types of small and medium enterprises. However, the LEAP market is only accessible to experienced investors, such as accredited investors, high net-worth entities, and individuals with very high net worth.
3. How well can the management meet the requirements?
IPO involves comprehensive planning and the preparation of numerous reports. When you are in the process of going public, you must analyze the preparation level of the management to ensure they can meet the requirements and expectations associated with a public company.
Moreover, a certain process is required to make sure the management is able to deal with the business results in an efficient manner. Investors expect the management of a public company to accurately forecast financial results and deliver results to enhance profitability. This must be displayed by the management to impress the investors and make sure they trust the company enough to invest in it.
Moreover, companies should also keep in mind that they might have to go through significant organizational and system changes while making the company public to meet legal requirements and equip the company to meet the challenges of a public organization.
4. What measures are suitable for the company?
There are certain standards that public companies are expected to follow and implement to meet statutory requirements. Private companies often have their own working procedures that might even deviate from generally accepted accounting principles (GAAP).
Nevertheless, once a company becomes public, investors, auditors, and other stakeholders expect that the company follows the same metrics, measures, and reporting standards as other companies.
Therefore, it is important for companies to rely on experts and professional audit firms in Malaysia during the IPO readiness assessment process to analyze the existing procedures and update them as per industry standards.
It is the responsibility of the company directors to make sure that the management is aware of the critical metrics across the different departments of the organization and how they align the reports with these metrics.
Moreover, the board also works closely with the management to set plans to achieve the target and ensure the maximum accuracy of the set metrics.
5. What are the top three risks for the management?
There are multiple different risks involved in an IPO. Most of these risks are identified by professional pre-IPO advisory services in the planning stage.
It is highly recommended that you narrow down the top three risks to make sure the company management can deal with such risks more effectively instead of getting distracted by every potential minor issue.
There are various questions and aspects that a company must consider while going public in Malaysia.
Such questions vary from the core organizational structure to the future planning of the company’s management about how it plans to deal with the legal and financial requirements of operating a public business.
Ultimately, an IPO can be difficult, but it can be made easier with comprehensive IPO readiness assessment and guidance from experienced audit firms in Malaysia.