Answer
May 13, 2018 - 02:20 PM
For some entrepreneurs, taking a company public is the ultimate dream and mark of success (usually because there is a large payout).
However, before an IPO can even be discussed, a company must meet requirements laid out by the underwriters.
In order to qualify a company for an IPO, one will need to meet these specific requirements.
1. The company has predicable and consistent revenue.
2. The business needs to be mature enough that it can reliably predict the next quarter and the next year's expected earnings.
3. There is extra cash to fund the IPO process.
(It is not cheap to go public, and funds from going public can't necessarily be used to pay for those costs as there are many expenses that start occurring long before it actually becomes public.)
4. The company should still have plenty of growth potential in the business sector.
(No one wants to invest in a company with no growth prospects; it wants a company with reliable earnings today but one that also has lots of proven room to grow in the future.)
5. The company should be one of the best players in its industry.
However, before an IPO can even be discussed, a company must meet requirements laid out by the underwriters.
In order to qualify a company for an IPO, one will need to meet these specific requirements.
1. The company has predicable and consistent revenue.
2. The business needs to be mature enough that it can reliably predict the next quarter and the next year's expected earnings.
3. There is extra cash to fund the IPO process.
(It is not cheap to go public, and funds from going public can't necessarily be used to pay for those costs as there are many expenses that start occurring long before it actually becomes public.)
4. The company should still have plenty of growth potential in the business sector.
(No one wants to invest in a company with no growth prospects; it wants a company with reliable earnings today but one that also has lots of proven room to grow in the future.)
5. The company should be one of the best players in its industry.
Add New Comment