Hear the initials “IPO,” and an image springs to mind: an innovative startup offering shares to an enthusiastic public. In reality, though, IPOs frequently are conducted by mature, successful enterprises eager to create value by going public themselves or to transform a subsidiary or line of business into a standalone public company.
BCG brings a holistic, end-to-end perspective to the IPO process. BCG’s Transaction Center and our IPO consultants help optimize IPO proceeds while delving into every facet of an offering. IPOs are highly complex transactions that can involve numerous interlocking business, financial, and legal details. From initial rationale to post-separation technicalities, we work to advance each company’s prospects and market leadership.
Envisioning the Enterprise: How BCG’s IPO Consulting Adds Value
IPOs don’t always deliver value. Our research shows that three out of ten IPOs with more than $500 million in annual revenues fail to outperform the market in the first year; this increases to about 50% for smaller IPOs. BCG’s IPO consulting services help clients navigate the demanding deal process while maximizing returns and long-term value.
- Before the process starts, we help you develop an overall IPO strategy by defining the deal rationale and the right perimeter (or scope), and assessing the value potential for the company, potential investors, and existing shareholders.
- We can also deploy a thorough readiness assessment, identifying any gaps and helping you close them quickly and efficiently ahead of the IPO.
- We focus on creating a powerful, integrated IPO equity story to demonstrate expected value creation through a combination of growth, cost reduction, and improved cash flow. Only by shaping the right equity story can companies meet funding targets and tread a successful path in the market.
- We help build a detailed, investor-proof business plan supporting the value creation story. A deeply substantiated and sufficiently ambitious plan, backed by clear proof points, provides a strong basis for investor and analyst guidance and communication.
- We enable you to continue running your business without distraction and manage complexity across stakeholders, from markets and existing shareholders to employees and advisors. No matter how high your IPO launch-day proceeds may be, an offering is only as successful as the business—or businesses—you’re left with after the stock exchange’s closing bell rings
Creating and Executing an IPO Strategy
Every BCG engagement begins with a deep exploration of your business. From there, we launch the IPO process by examining whether an IPO is in fact the best option. A private sale to another industry player or to a private quity firm, collectively known as a trade sale, may be preferable or equally promising.
In fact, we often recommend that clients pursue two or three paths simultaneously. Such a dual-track or triple-track strategy helps ensure that you have other viable options should an IPO suddenly become infeasible because of changing market conditions or other factors beyond your control.
IPO planning often takes place in parallel with a carve-out process, separating the target entity from its corporate parent operationally and financially. Like IPOs themselves, carve-outs typically are large-scale, high-stakes projects involving complex activities and a multitude of details. Here, too, BCG’s strategic focus and deep industry expertise help maximize the value of the newly formed asset, instead of just focusing on mechanical separation processes.
Once a company has decided to pursue an IPO, the real work begins. While IPOs can happen in as little as 6 months, 12 to 18 months is a more realistic timeline to ensure the company is well prepared for its journey as a publicly listed entity.
Our comprehensive, proven approach divides the IPO runway into three phases: conceptualize, prepare, and execute–each aiming to improve the chances of a successful IPO.