April 3, 2019

2019 is expected to be a big year for initial public offerings, with big names like Levi Strauss and Lyft hitting the market just in the past couple of weeks. Many big names are still expected, including Uber, Airbnb, Slack, Pinterest, Postmates and WeWork, to name a few. As a company that helps our clients buy and sell businesses, we’ve definitely taken notice of the trend.

Knowing when to go public is a tricky thing, and without a doubt, companies who have spent several years laying the groundwork are in a tremendously advantageous position when it comes to the moment of truth. While there’s no one way to guarantee success, there is one thing successful public and private sales tend to have in common: the companies have a compelling story to tell.

On a fundamental level, it’s still a sales process, and whether you’re selling shoes, vacuum cleaners, houses or multi-billion-dollar businesses you’re going to need to win hearts and minds. In this case, you’re going to need to be able to wax poetic both on the vision for the company, and also explain historical and projected financial performance.

Your reporting and business intelligence tools sit squarely in the center of the second part of this equation. How accurately can you project future performance? How well can you explain past ups and downs in operating income? The story you spin can either make you look like a savant or a company that’s flying by the seat of its pants. Gaps in these analysis capabilities can damage a company’s sale and/or their ability to raise future capital.

According to Tom Farley, who served as President of the NYSE until 2018, “Developing accurate forecasting and budgeting functions while your company operates privately is an important step in proving the accuracy and consistency of your financial reporting to gain credibility with investors. You’ll be expected to share records of historical financial statements and forecasts during the IPO process.”

Heeding Farley’s advice, finding ways to go beyond standard reporting and maximize your BI tools to see deeper into finances and operations now will help lay critical groundwork for success in a future sale. Our clients tap into our expertise to deepen and accelerate these analysis capabilities. Having been on both the buying and selling side of the equation, we know what a successful story looks and sounds like.

For a company that’s in the months and years leading up to a potential sale, our Catalyst software can help them develop keen insights into historical data and build a record of successful projections over time that can ultimately affect their valuation.

The Catalyst software allows our clients to bring together all of a company’s financial and non-financial data seamlessly and then slice it, dice it and dive deep into the numbers to make faster and more precise adjustments, and eventually tell that company’s story with concrete data and hard facts, if and when it comes time to sell. These hard facts are assets that can play a critical role in preventing any nasty surprises during the diligence phase of buy- and sell-cycles, and this in turn helps build confidence with potential investors.

We also use Catalyst to help our clients make faster and easier course corrections by uncovering inefficiencies and identifying opportunities. Catalyst allows users to pull reports and run what-if scenarios in a matter of minutes, not days, for deeper and faster analysis. These serve as tools that help our clients improve long-term profitability and can have a profound effect on valuation, if and when they decide to sell or take a company public.

Ultimately, these are all things that can be wrapped together into a narrative that shows the story of a business – proving out plans with hard data investors can get behind, rather than asking them to trust their gut. Having been on both sides of the table, we know having assets like greater visibility, agility and analysis capabilities in your toolbox will give you more control of the story than ever before.