Getting your company publicly listed on the stock exchange is a great way to gain access to capital and unlock value for shareholders. To list your company successfully, there’s more to just fulfilling the listing requirements. As your company’s main shareholder and promoter, you’ll need to proactively build and position your company such that investors can clearly envision the upsides of your company; otherwise, investors may not support your shares at the value that you’ve hoped for. This Executive Knowledge Review will share some of the key success factors to help unlock the full potential of your company’s value, based on our experience working with publicly listed companies.
5 Keys to Maximizing Shareholder Value
Key 1. Know What Your Investors Want to Hear about Your Business and Industry.
It’s important to understand what your investors are expecting from a listed company in the sector your are operating in. Investors are always ready to invest in businesses whose growth plans are aligned with forward developments in their industries and demonstrate reasonable upsides. As your company’s primary promoter, ensure that you are fully aware of the national and global trends that are shaping your industry, and that you internalize these knowledge and decide on how best to position your company given these trends. Keep in mind that you will have to sell your company not only at the IPO stage, but also before and after it—to the investment bankers that will consider whether your company has good prospects for listing, and to the institutional investors that will become the prime movers of your future company’s share value. The better you are able to promote your company and your industry, the higher your potential share value will rise.
Key 2. Align Your Core Businesses with Future Upsides. If Not, Invest in Developing New Core Businesses.
You will need to get your business growing in the right direction. Firstly, ensure that your company’s vision is aligned and forward looking; if you find yourself lacking a credible, forward looking vision, you will need to invest some time to look into this or engage a business consultant to assist you. Next, assess your business functions, across operations, marketing, sales, human resource, supply and distribution chains, and ensure that they are in line to achieve your company’s vision; If not, you may have to invest in new business units or diversify to add on new core businesses. Lastly, take a look at your organizational structure. Ensure that your organizational structure is sufficiently robust to manage and support your business units for future growth.
Key 3. Have a Successor Team in Place. This Shows that the Business is Invested for the Long Term.
One of the most overlooked areas of management is succession planning. This is not surprising as succession planning might be counter-intuitive, especially if business owners are still hands-on in the business. In reality, having a good successor team in place (or in apprenticeship) is valued by investors, who appreciate the peace of mind that stable management brings in return for their investments. In addition, having a successor team demonstrates confidence to investors, that the company is invested for the long term, which contributes back to positive share value. Successor planning typically happens in two ways: firstly, if your goal is to keep the business in the family, you can involve your children or next generation family members in the business, preferably with at least 3 to 5 years experience prior to the intended IPO; secondly, you can create a pipeline for your senior management team to ascend to top leadership positions, with corresponding succession pipelines being put in place at the senior management level in turn. Keep in mind that once your company is listed, your succession options will not be limited to just these two, so don’t feel reserved establishing formal succession plans prior to IPO.
Key 4. Assemble an Effective and Reliable Due Diligence Working Group.
The due diligence working group (or DDWG) is the team that will take your company through the end-to-end process of getting your company listed on the stock exchange. Considering that a typical listing process (without complications) may last from anywhere between 6 to 12 months, assembling a reliable DDWG team that you will feel comfortable working with is one of your most important tasks as a business owner. An effective DDWG team enables you to discuss all areas of your business in confidence, streamlines the entire listing process with minimal delay and conflict, and helps you add value to your company’s IPO share value. The DDWG team is typically led by an investment bank who will act as your principal adviser, but other members of the team: due diligence lawyer(s), principal accountant, company secretary, public relations firm, property valuer(s), issuing house, and the business consulting firm, are equally important. In particular, you should leverage on your business consulting firm to add value to your company’s share value. The business consulting firm is responsible for the independent market research section of your listing prospectus, and can advise and help to enhance the credibility and appeal of your company in the eyes of potential investors.
Key 5. Deliberately Make Time to Engage with Institutional Investors, Pre- and Post-IPO.
The final key that many business owners fail to do well and consistently enough is to engage with your potential and actual investors, particularly institutional investors. Institutional investors are important touch points to engage with as they are typically the prime movers of your company’s share value. In addition, they serve as indicators (or benchmarks) for other investors to follow suit. Depending on the sector you are operating in, institutional heavyweights may include EPF, PNB, and Khazanah, as well as similar government-linked investment bodies. You should certainly make time to engage with them and inspire them about your industry and company’s future prospects (see Key 1). Don’t ignore investment banks and investment firms; these investors frequently publish authoritative investment reports and any positive recommendations about your company’s shares and industry outlook will help shore up support for your share value.