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Creating Shareholder Value
as a Public Company:
Building Financial Foundations Before and After an IPO
THE IPO CHALLENGE
Brilliant IPO success stories such as those of Yahoo! and Amazon.com are
widely known. The opposite side to these success stories is a problem
plaguing the vast majority of IPOs - underperformance. Information
provided by Securities Data Company reveals that most IPOs perform
relatively poorly in the first three years after going public -
significantly underperforming the overall market in both operating and share
price returns.
A study conducted by Ernst & Young surveyed CEOs, CFOs, and other senior
managers of 2,500 companies that completed IPOs between January 1, 1986, and
August 31, 1996, and identified one common factor: highly successful
companies viewed the IPO as a ‘transformation process,’ while the
unsuccessful companies treated it as an ‘event’ – a purely short-term
financial transaction.
Our case study describes how one company used strategic financial education
and motivation to prepare its executives and managers to conduct a
successful IPO and build a growing and profitable business that would meet
the needs of all stakeholders.
CASE STUDY
Based primarily on an incompatibility between the division business model
and the parent company model, a large corporation decided to spin off an
operating division as a public company through an IPO. Another motivating
factor in this decision was that the parent company saw greater cash
potential from the IPO than would be generated from an internal division.
The parent corporation intended to use the money it received from the IPO to
fund its planned growth initiatives, pay down debt, and buy back stock.
Division managers were to be the executives and managers of the newly formed
public company.
Needs Assessment, Challenges and Financial Strategy are described in detail
in the case study.
CONCLUSION
After the IPO, strategic financial education - when incorporated with other
initiatives drives change and profitable growth. Critical components of a
successful IPO encompass a wide range of business practices with financial
knowledge, skills and alignment with company strategy on all levels topping
the list!
TYPICAL INVESTOR QUESTIONS:
Please request a Free copy
of the entire case study by email:
www.FinanceForManagers.com
Or call: (949) 706-0623
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PENN
POST designs and conducts seminars that promote positive change within
organizations. Incorporating proven tactics with unmatched success for 25
years, Mr. Post’s seminars include: Managing for Financial Success &
Shareholder Value; Shareholder Value Leadership; Business Planning and
Analysis; Growing Revenue; Profit and Cash Flow Management; and Sales
Training.
Mr. Post authored Ten
Ways to Improve Profitability, and is a Certified Management Consultant
(CMC).
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