Going public on the stock exchange, or conducting an IPO, is one of the most important decisions any company can make in the market.
Ultimately, it's one of the strategic decisions that definitively alters all of a company's management processes, as well as being an excellent opportunity for the company and/or its partners to raise capital. However, success in selling shares on the stock exchange depends on a meticulous process of advance preparation by the company.
The COVID-19 pandemic shook the economy in 2020. But, on the other hand, almost bucking the trend, the stock market managed to overcome many of the initial losses. Despite all the uncertainties, 2020 broke the record for the number of investors on the B3 stock exchange, with 25 initial public offerings (IPOs), which generated a significant R$ 31,7 billion throughout the year.
Even though some companies have abandoned the process due to the challenging environment, there are currently more than 40 IPO registration requests pending with the Brazilian Securities and Exchange Commission (CVM). Therefore, for those planning to go public, now might be the ideal time to start preparing for the coming period, knowing that they will face strong competition in the market.
The process can be lengthy and includes very important steps such as having well-defined internal processes and governance rules, steps that result in the path of transparency that a publicly traded organization needs to achieve success in the business world.
To achieve this goal, the organization needs access to a wide variety of real-time data; this is only possible with one fundamental ingredient: the use of an enterprise management system..
With that in mind, find out what they are. Five key benefits of using an enterprise management system and how they will help your company in the IPO preparation process:
1) Financial processes
The importance of having a strong and comprehensive financial foundation before an IPO is enormous, and its necessity is indisputable.
Companies that go public on the stock exchange need to be prepared to provide three years of audited financial data, which means their systems must be capable of delivering this. Oracle NetSuite helps on all these fronts, providing financial data and important insights for business management in real time.
Another important point is that key decision-makers should be aware that regulatory requirements will prohibit them from changing any financial system during, and for up to two years after, the IPO process.
Companies seeking an IPO must also be able to handle modern accounting challenges, such as asset valuation, consolidated financial statements by subsidiaries, and revenue recognition.
Oracle NetSuite provides the tools and resources to navigate this complexity. For example, Oracle NetSuite's Advanced Revenue Management module makes it easier than ever for businesses to comply with revenue recognition accounting standards.
2) Financial reports
In an IPO process, access to reliable, real-time financial statement reports is a necessary step; therefore, there is a need to invest in automation systems that support the global consolidation of financial reports.
By eliminating manual reconciliations and data entry, a company can scale more effectively as the business grows in volume or complexity. Furthermore, by ensuring that reporting processes are transparent and supported by auditable processes, a company will reap dividends throughout its IPO journey.
It is very important for companies to have access to detailed management reports, which requires a deep understanding of the fundamentals of the business.
The ability to analyze past performance and predict the future requires investments in business intelligence and analytics. With Oracle NetSuite, companies have access to various types of automated reports centered around key performance indicators (KPIs) with dashboards, making it possible to analyze each department and subsidiary with an intuitive interface that allows even less experienced users to perform complex analyses.
3) Establish good corporate governance.
Companies considering an IPO must establish strict corporate governance rules to successfully go public on the stock exchange.
Unfortunately, many private companies do not fully understand the importance that governance plays in long-term success, and those that do prioritize governance often underestimate the time and effort required to establish effective corporate governance.
When a company goes public, regulators and investors demand that it be managed in a transparent and consistent manner.
Management systems like Oracle NetSuite have Governance, Risk, and Compliance features built into their processes, giving companies confidence in their reporting and audits from startup to IPO.
Automated controls and profile-based access can also incorporate a security measure within the financial system.
4) Establish investor relations and corporate communications.
Although investor relations departments can't sell products or secure large contracts, they can help your company preserve its reputation through the ups and downs that any organization faces.
Once a company has its shares publicly traded, it becomes an open book for the entire market, which means that the list of stakeholder groups increases significantly.
A well-developed investor relations (IR) operation ensures that the company communicates effectively with the entire financial community and integrates all information from the finance, marketing, and legal teams.
A strong Investor Relations team, supported by metrics, provides a clear view of the business and needs to build a transparent reporting process throughout.
By providing quick and up-to-date access to financial metrics and reports, Oracle NetSuite provides the resources that companies need to build an Investor Relations (IR) focused organization prepared to meet market challenges.
5) Develop risk management resources
When a company goes public, it's a process that introduces significant risk, increasing its level of responsibility in the market. Being able to anticipate potential problems can mean the difference between success and failure.
Oracle NetSuite provides access to real-time KPIs and automated, rule-based alerts, identifying risks before they become real problems. This helps protect businesses from making wrong decisions and preserve the integrity of their systems.
Conclusion
By using a management system like Oracle NetSuite, your company will take significant steps toward achieving success in the IPO process.
However, we know that simply using a system does not guarantee success, but this process becomes much more fragile and prone to problems if business management software is not used.
Are you currently in the process of an IPO or planning to do so in the future?
We at Active have helped many companies in the market build a successful path to implementing an enterprise management system, Oracle NetSuite.
We are always looking for new challenges to help more and more companies achieve their goals.
We are available to answer questions and send presentations and proposals.
