Five Critical Steps to Prepare Your Business for New Funding
Published on 26 Nov 2022
Twenty-five years ago, when the first dot-com enterprises began to flourish, the capital markets environment was dramatically different. Since its peak in the late 1990s, initial public offerings have continued to fall, although public businesses today are usually more stable and bigger.
The private capital market expanded during that period. Regulatory changes and economic and market circumstances led several firms that may have previously explored an IPO to remain private for longer, relying on venture capital, private equity, and debt funding. The dramatic increase in private support is indicative of the transition. According to GlobalData, the Asia-Pacific area continued to attract the attention of venture capital (VC) investors in 2021, as the region announced a record 5,685 agreements (with revealed deal value) compared to 3,949 in 2020.
The private capital market has surged in recent years. Regulatory changes and economic and market circumstances have caused many firms that may have previously contemplated an IPO to remain private for a longer period, funding themselves via venture capital, private equity, and debt.
And it all boils down to one basic fact: the scrutiny of both public and private corporations is at an all-time high. Companies preparing for an initial public offering that hasn't functioned as such for a lengthy period are certain to struggle with regulatory compliance and investor expectations. And since private firms tend to remain private for longer periods than in the past, the stakes for great financial management are considerably higher, with private investors scrutinizing "the numbers" as it becomes more difficult to secure profitable partnerships and create returns.
The outlook for both the public and private capital markets remains optimistic. APAC markets continue to be appealing locations for organizations seeking to obtain finance in the future.
Strong governance, financial procedures, and automated systems are critical for firms seeking to capitalize, both in obtaining and supplying timely information to prepare IPOs and continuing to satisfy and attract private investors.
The Story Remains the Same, Whether It's an IPO or a Private Equity Offering
While the pathways are distinct, the methods to prepare a finance organization for an initial public offering and to seek private equity share many similarities. Both need a historical perspective of data and real-time access to financial and operational data to address stakeholder concerns, make sound choices, and lead the development of sustainable company plans. Whether it's required by law in the case of a public business or just an increasing expectation of private equity firms that may request reports anytime they want, having efficient procedures and ready access to the information is essential for the success of the firms.
Your organization should be able to address tactical performance questions about planned vs. actual expenditure, sales pipeline, and cash flow analyses and provide comprehensive information on the five-year strategic plan. And do you have access to data that permits a comprehensive market share examination?
If this information resides in a collection of spreadsheets and various platforms, the answer is likely "no." There is little opportunity for mistakes; therefore, planning and preparation are of essential significance. In light of this, we have gathered five actions that firms participating in the capital markets may take to guarantee that their financial processes and system infrastructure are optimized for their performance.
Groupon, LogMeIn, Inc., and OpenTable, three of the most successful public firms in the world, have used NetSuite to manage their operations and ensure the agility and scalability required to function in today's capital markets. According to Traders Magazine, technology is now more integrated than ever into capital markets' operations. The cloud offers organizations in these areas notably "scale, huge computing, the newest AI, and better data analytics."
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