Changing the focus: product to profitability; Companies doing an initial public offering need to know more than just what the rules are for public companies. Employees need to understand how being public changes the vision, financial goals and responsibilities they now share.

Financial Executive › Vol. 23 Nbr. 5, June 2007

Author: Post, Penn

Position:: IPOs - Company overview

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Summary

IPOs - Company overview

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Changing the focus: product to profitability; Companies doing an initial public offering need to know more than just what the rules are for public companies. Employees need to understand how being public changes the vision, financial goals and responsibilities they now share.

While brilliant initial public offering (IPO) success stories such as those of Yahoo! and Amazon.com are widely known, the reality for many IPOs is quite different. Studies by Ernst & Young and data from Securities Data Corp. reveal a more realistic picture:

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* Most IPOs perform poorly in the first three years after going public--significantly underperforming the overall market in both operating and share price returns.

* Those that succeed view the IPO as a transformation process, while unsuccessful companies treat it as an event or short-term financial transaction.

* In retrospect, 62 percent of the executives in unsuccessful compani...

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