What do you think are the most important steps for companies to take when launching an IPO in volatile times, and how can they best mitigate risk?
JW: It is most important to appoint the right advisers. I do put that quite high on the list: it is essential to have a team on board at an early stage that will work with your management team to guide you through the process.
In addition, the volatility of the market means you have to be flexible. It’s important for companies to develop an IPO strategy, but also to have a Plan B and Plan C, because the volatility means that no matter how good the company, no matter how good the story and the management team, there may be instances where you just can’t get an IPO right away and you have to look at an alternative for raising funds.
If the markets just aren’t there, because there’s no investor confidence, you need to have the alternatives, whether it’s a private placement, a private equity play or a trade sale.
What are the common reasons for IPOs to fail and what can companies do to avoid making these mistakes?
JW: One of the most common reasons is a failure to embrace the disclosure requirement fully. Companies have to recognise that in going public, there is quite an airing of the company and, therefore, they have to be ready to disclose everything and embrace appropriate governance standards.
But more often than not, IPOs fail because they’re not priced at the right level or because they’re overly optimistic with the price and they underestimate the interest at the time or the investor confidence at the time. How do you avoid that? Well, you need to do a thorough analysis of the market and the investors that you’re expecting.