COMMON MISTAKES WHILE LISTING A COMPANY

Listing a Company on a stock exchange through its IPO is considered a very major and successful step in any organisations history. But at the same time, a Company which wants to raise funding through an IPO may fall into one of the many pitfalls related to its listing.

Some of such common mistakes are:

1. A Company looking forward to raise equity funding and growth capital through listing might want to list when it is too small. There will be little liquidity in its share therefore leading to a very minimal if any, broker or institutional interest. Moreover, if the company performs poorly, any interest from the initial investors can reduce very quickly and it can take a long time to get back the interest.

2. The Company may have a very aggressive view of increase in value (pot of gold at end of rainbow) that surely must flow from the listing, i.e. a very high price-to-earnings ratio expectation.

3. Most companies tend to underestimate the time and cost of the listing process that can take up a large span of time, and can lead to distraction the managers and stakeholders from the core business of the company.

4. The management of the Company might underestimate the costs of being a listed company in terms of having a board in place, setting up a head office, compliance issues, investor relations and so on. In the area of compliance issues and investor relations, the top management of the Company might have to spend up to 20% of their productive time.

5. The management might tend to underestimate the difficulty of moving from private company to public company status under which the company needs to follow a whole new set of rules and regulations.

Conventional wisdom states that it is best for a Company to wait until the market sentiments are positive, and the share markets are on a rise before bringing out their IPO. The decision would also depend upon how much money is proposed to be raised, coupled with the immediate prospects for the company.

 

Contact us for all your equity funding through listing requirements.

 

Financial Products

Total Capital Solutions Ltd has strong relations with various Financial Institutions and can help companies acquire letters of credit, bank guarantees, proof of funds and performance bonds.

Credit Facility

A Credit Facility is a flexible financing structure in which GPG commits to purchasing shares of common stock directly from a company, at prevailing market prices, over a multi-year period - contact us for more information.

Prospectus Preparation

Our legal associate can prepare Prospectus both in English and German and handle the BaFin or FSA approval process.