Question

Recently there has been a surge of IPOs – Snapchat, Carbon Black, Lyft, Huya, Uber (pending), etc. Were they successful and why? What does it take to have a successful IPO?

Answer 1

These IPOs are not seen as entirely successful, with some failing miserably and some at an Ok-Ok position. Like : Lyft’s IPO has been termed to fail have failed badly whereas there are mixed opinions on Snapchat’s IPO.

An IPO’s success is usually measured in terms of amount of capital raised, the valuation amount, any appreciation in share price, supplier confidence, etc.

For an IPO to be successful, following can be seen as important requirements:

1. When a company is at a growing stage and has growing number of market.

2. The product offered is quite attractive. If it has first mover advantage, then it can be make a company’s IPO a success as demand would be high for IPO.

3. Strong cash flow of company with sustainable inflow and margin.

4. Strong experienced top management team

5. Fully compliant, robust financial background.

6. The price discovery process must be well designed adequate

7. Adjusting IPO offer size

8. Correct/apt timing to float the IPO based on market environment (market trends , strategy and competitive environment).