Executive Summary
Endurance believes that many financial institutions need to be fully informed before making the decision to go public. Endurance Advisory Partners has worked with financial institutions to develop the internal discipline necessary to become a public company. Below are thoughts about the pros and cons of an IPO, the IPO process, and public company valuation.
IPO PROS AND CONS
IPOs often require complex decisions and difficult trade-offs. Many companies enter discussions about an IPO only to abandon the effort part way. Before proceeding along this path, it is important for the Management and the Board to carefully evaluate the pros and cons of all capital alternatives. In many cases, there are other options that better fit the company’s needs. In general, an IPO is more often the right answer for a bank than for a mortgage company; more often for a large cap than a small cap; more often for a tightly controlled company than a flexible one.
IPO PROCESS
To IPO or not to IPO is a decision requiring careful consideration. Before proceeding along this path, it is important for the Management and the Board to understand the full breadth of this undertaking.
IPO VALUATION
IPO Valuation is an art that is obscured by spreadsheets showing hundreds of statistics. In due course, price – perhaps the most important number – finally gets our full attention. Companies go through the whole IPO process without knowing the price. Understanding what investors and investment bankers evaluate to determine the price is the best way to set expectations.
