IPO

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 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

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.

Throughout the IPO process, BCG challenges management to take the investors’ perspective and helps find solutions to the following questions:

Conceptualize

• IPO Strategy. What is the rationale for the IPO? Is it the optimal exit route? What is the right perimeter?
• Financial Readiness. Is the business plan sound and investor-proof? Is a convincing equity story in place?
• Reporting Readiness. How will regulatory requirements be met? Does the company have the necessary processes and infrastructure?
• Corporate and Governance Readiness. What structural changes, new capabilities, and new processes are vital?
• Investors. Whom do you expect to invest in your business? What are their criteria and metrics? Must your strategy adapt?
• Equity Story. What differentiates your IPO, and why? What is most compelling and supportable?

Prepare

• Capital. How will capital and dividends be structured? What about debt: inherited, new, none?
• Technical. On what exchange will you list, and why? With which underwriting manager? How?
• Transaction Process. Does your prospectus fulfill regulatory requirements? What IPO due diligence is crucial?

Execute

• Regulatory. How will prospectus deadlines be met? Financials submitted within a legal window?
• Messaging. How will analyst and investor IPO communications strategy materials be created?
• Financial. How will book-building, or price discovery with institutional investors, be conducted?