UK: In the nick of time? How to get your IPO off to a flying start in 2018
Going public should never be seen as a vanity project or as a means for the original founders to exit the business. Laura Mott, partner at MSI's London-based accountancy member haysmacintyre, explains further.
This time last year the IPO market experienced a period of rejuvenation, following the slump in 2016 which continued throughout the year. With companies such as Snap Inc. making the leap and Airbnb and Uber declaring that they are not far behind, it is clear, for the tech industry at least, that IPOs mean big business. 2018 looks to be positive where tech companies are concerned; Swedish music streaming service Spotify have just announced they are looking to progress with a direct listing on the New York Stock Exchange in the next six months.
When considering going public, timing is crucial if the venture is to be a success. For example, Airbnb recently announced that they plan to delay their IPO, after raising $1bn of VC funds. This is a good example of internal timing consideration, but it is also important to consider the external factors that could impact on the success of an IPO.
Periods of economic and political uncertainty can be a determining factor in whether companies choose to make the jump promptly or sit back and wait out the storm. 2016 saw Britain vote to leave the EU and coupled with the US election result apprehension, anxiety and economic volatility began to set in. This led to the IPO market experiencing a dry spell – 2016 saw the lowest activity since 2009. When experiencing these periods of global uncertainty it is important to evaluate the longer term effects of such seismic events, the consequences of which are likely to be felt long after the initial occurrence. Ensuring there is a thorough understanding of the level of investor appetite for tech businesses throughout these periods is crucial. Understanding wider market activity will result in a more comprehensive assessment of the right time for an IPO, but is not the be all and end all. Arguably there is never a ‘right time’ to float, but knowing the current market and having a solid strategy in place from the start ensures agility and flexibility once there is a peak in investor appetite.
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