Timing is everything: Deloitte poll finds that timing the market is the biggest obstacle to going public
Companies underscore market uncertainty and building the right team as major roadblocks to initial public offering readiness in the slowest IPO market since 2009.
New York, June 22, 2016—A new Deloitte poll shows more than one-third of companies view timing the market as the biggest concern when considering an initial public offering (IPO). Reservations about building the right team and business infrastructure ranked as the second leading concern. Overall, companies are optimistic IPO activity will increase over the remainder of the year.
The poll of nearly 3,000 executives across a variety of industries was conducted during a “Deloitte Dbriefs” webcast focused on the current market and legislative environment for IPOs.
The webcast examined the significant burdens going public puts on companies. Specifically, leaders from Deloitte’s Emerging Growth Companies Business and Technology practice provided insights into how companies can navigate the increasingly complex IPO landscape, particularly in the face of residual economic uncertainty and volatility in the capital markets.
“For companies in the middle market, IPOs are a pivotal growth strategy and a poorly-timed offering can be incredibly difficult to overcome,” said Heather Gates, director and west region Emerging Growth Company practice leader, Deloitte Services LP. “If the markets are unfavorable at the anticipated time of issuance, performance suffers. Companies must closely track the volatility index and be prepared to jump on opportunities in the market.”
According to Gates, in addition to timing the market, more than a quarter (28.7 percent) of respondents ranked building the right team and business infrastructure as a major challenge. Having strong people, systems, and processes in place that can withstand the rigors of the IPO process should be top of mind for companies.
“Companies can pave the way to success by focusing on accounting, financial, legal, business, and systems matters well in advance of going public. Furthermore, companies should place a high priority on finding personnel with the right skill sets to appeal to investors, build accurate forecast models, and meet all compliance, reporting, and filing requirements,” Gates added.
“Often, companies wait too long to bring on a professional management team, creating a last- minute scramble that may result in missing opportunities and risk long-term success,” said Mohana Dissanayake, partner and Audit Technology practice leader, Deloitte & Touche LLP. “Assembling a strong business infrastructure, investing in the right finance personnel, and building the right team are crucial not only for the initial offering but for establishing credibility in the eyes of investors in subsequent quarters.”
Executives also cited attracting the right investors and analysts (20.4 percent), and to a lesser extent, advance planning and early adoption (10.1) as major challenges in their decision-making process. Despite the obstacles, more than 34 percent of respondents say IPO activity will increase moderately this year.