What is IPO in business

1.7. Criteria for a successful IPO

There are criteria that can guarantee a successful IPO. These are conclusive and easy to meet. All that is required is the willingness of the IPO candidate to view the IPO as a stand-alone project that differs significantly from its normal operational business. This is about the placement of the stock, not the company's products or services.

Convincing equity story / attractive investment case

  • Comprehensible, sustainable, promising business model with attractive return expectations

Competent management

  • Confident and convincing demeanor paired with strong specialist knowledge

Unique selling points

  • Helpful for a positive differentiation from competitors or other comparable companies that are already listed on the stock exchange

Active capital market communication

  • One of the core tasks will be transparent investor relations work that actively maintains contact with the financial community and provides timely and comprehensive information (even in the event of bad news).

Plausible use of funds

  • The targeted and traceable use of the financial resources from the IPO is a core element in attracting shareholders.

Compliance with legal regulations and market practices

  • Exchange rules, guidelines for transparency levels such as Entry Standard or M: access, General and Prime Standard
  • Formal marketability

Market-compliant issuing structure

  • The issue structure (free float, ratio of old shares to new shares, ratio of issue volume to sales, greenshoe, market segment, ...) should be based on market conditions and must be adapted to the situation. Simply “cashing in” from existing shareholders can make a high-quality share unplaceable.

Attractive pricing

  • The issue price must not only allow the company an appropriate enterprise value, it must also offer investors an incentive to buy, leave room for increases in value and take into account the respective situation on the stock market.

Liquidity in the secondary market

  • The greater the daily trading volume on the stock exchange, the more attractive the share becomes for institutional investors.

Author:Stefan Hock
PDF:Criteria for a successful IPO (1.4 MB)