Many private companies opt to raise capital using the IPO route to fund its growth and financial needs and requirements. The IPO Meaning goes beyond a source of raising funds and capital for the company and the business but also gives the company a chance of enhancing and building its brand and public image
What is an IPO
An Initial Public Offering, popularly referred to as an IPO, is a private company proposing going public by issuing shares to the public for the very first time. Initial Public Offering is issued by companies looking to raise capital towards growth and expansion of the business.
Why do Companies go Public?
- One of the primary reasons for a private company to go public is to raise finance for growth and expansion of the business.
- Public companies offer a better rate of interest while raising debt due to the intense scrutiny required for public limited companies.
- Open market trading translates into liquidity.
- Public limited companies can adopt innovative tools to retain talent such as employee stock options.
IPO as a tool for Brand Enhancement
Companies can utilise the launch of its Initial Public Offering as a tool for enhancing its public image and brand image within the public. It is essential for companies to set their brand strategy in place along with their public financing strategy. It is essential for a company to take an honest look at its brand image from the fresh perspective of the public. The company should ask itself how strong its brand image is? How does the public see and perceive its brand? Does the company’s brand reflect an ethical business model with robust integrity? Are the products and services of the company in-line with the company’s brand? Does the present brand image of the company add value or devalue its IPO valuation? Is the messaging platform of your brand sustainable post the IPO? Have there been any changes in the company’s brand image in the last few years?
The company needs to dig deep within its brand image and public image and critically analyse the present standing of its brand regarding its public image, evaluate what kind of brand image does the company desire and plan a roadmap towards achieving its goals.
The company can undertake the following steps towards repositioning its brand image
- Develop a Factor of Differentiation of your Brand from your competitors.
The company needs to evaluate its competitive advantages and further analyse whether its competitive advantage is reflected in its brand, public image, brand identity and external communication? If the answer is no, in that case, the company should develop a branding strategy and formulate a robust plan towards rejuvenating its brand image and ensuring a positive positioning of your corporate brand. Generally, during an IPO, it is advisable for a company to offer the investors and its customers something innovative and original to aid enhancing its corporate branding and brand image.
- Building a Robust Brand and Corporate Image
The company’s image and reputation is large build by its actions, i.e. by what it says and does. It is essential for the business to develop its own platform for corporate communications and messaging and ensure it is up to date current and relevant. The company can use this platform for delivering important messages. The company also needs to ensure that its executive management is following the same set of rules for corporate communication and the company also needs to ensure that its employees understand the importance of following the company’s disclosure policies.
Some of the non-financial metrics which aids in enhancing the IPO value of a company are its reputation, customer satisfaction, integrity etc. Hence it is essential for a company to understand its intangible assets and communicate them to the public in a subtle and non-direct manner. Companies and businesses can leverage its intangibles towards building strong brand value. The importance of these intangible has increased in the last few decades, and hence it is important to maintain and leverage them,
- Keeping your message clear, consistent and concise
This is applicable way beyond to the companies ROC and SEBI filings required towards compliance. The company should work towards the development of important messages for its stakeholders on a regular basis. The company should keep its messages short and concise and remain consistent pertaining to its values. In case they are an error made by the company, it should be prompt to apologise and take necessary corrective action rather going on the defensive mode.
- A well-informed investor based is highly receptive
It is vital for a company to develop a strategy for media relations, especially in the case it wishes to enhance its brand image. A good image in the media is important, especially with the financial media press and the general business media before the launch of your IPO.
Establishing the business’ strategy for transparency and engagement with the pertaining to the performance and strategy of the business, by creating knowledge resources regarding your company, its products and services, brand image etc.
The corporate brand of an organisation is an important non-financial element which can positively portray the brand and the organisation in a positive image. A company with a robust and compelling brand which is well presented and positioned significantly adds a lot of value to the company’s IPO. It will also aid the company to sustain and grow that value of the company and its brand value post the aftermath of the IPO.