Gresham House’s Post

📊 𝗔 𝗪𝗼𝗿𝗱 𝗼𝗳 𝗖𝗮𝘂𝘁𝗶𝗼𝗻 𝗳𝗼𝗿 𝗦𝘁𝗮𝗸𝗲𝗵𝗼𝗹𝗱𝗲𝗿𝘀 𝗼𝗻 𝗦𝗠𝗘 𝗜𝗣𝗢𝘀 As the 𝗲𝘂𝗽𝗵𝗼𝗿𝗶𝗮 around IPOs continues, it's essential for all stakeholders—investors, auditors, and merchant bankers—to pay close attention to some key financial aspects to ensure the long-term success of these companies: 1. 𝙎𝙪𝙙𝙙𝙚𝙣 𝙄𝙣𝙘𝙧𝙚𝙖𝙨𝙚 𝙞𝙣 𝙋𝘼𝙏 𝘽𝙚𝙛𝙤𝙧𝙚 𝙄𝙋𝙊: A spike in profits just before launching an IPO can raise eyebrows. Always analyze the quality of earnings and ensure they are sustainable in the long term, not just dressed up for the IPO. 2. 𝙏𝙧𝙚𝙣𝙙 𝘼𝙣𝙖𝙡𝙮𝙨𝙞𝙨 𝙤𝙛 𝙈𝙤𝙣𝙩𝙝𝙡𝙮 𝘽𝙪𝙨𝙞𝙣𝙚𝙨𝙨: Consistency is key. A detailed trend analysis of monthly performance offers valuable insights into a company’s stability and growth potential, helping to avoid any misleading one-time gains. 3. 𝙍𝙚𝙡𝙖𝙩𝙚𝙙 𝙋𝙖𝙧𝙩𝙮 𝙏𝙧𝙖𝙣𝙨𝙖𝙘𝙩𝙞𝙤𝙣𝙨: Transparency is key. Related party transactions should be carefully examined to ensure there is no financial manipulation. Stakeholders must ensure full disclosure and that these transactions do not undermine investor confidence. 4. 𝙊𝙗𝙟𝙚𝙘𝙩 𝙤𝙛 𝙩𝙝𝙚 𝙄𝙨𝙨𝙪𝙚:   - 𝙁𝙤𝙧 𝘾𝘼𝙋𝙀𝙓: Stakeholders should check if the existing capacity is fully utilized and whether the proposed additional CAPEX is genuinely adding capacity or just inflating the company’s valuation.   - 𝙁𝙤𝙧 𝙒𝙤𝙧𝙠𝙞𝙣𝙜 𝘾𝙖𝙥𝙞𝙩𝙖𝙡: Understand the company’s working capital cycle thoroughly, as mostly all the SME IPOs are focused on raising funds for working capital. A 𝙬𝙚𝙡𝙡-𝙥𝙡𝙖𝙣𝙣𝙚𝙙 𝙬𝙤𝙧𝙠𝙞𝙣𝙜 𝙘𝙖𝙥𝙞𝙩𝙖𝙡 𝙨𝙩𝙧𝙪𝙘𝙩𝙪𝙧𝙚 can be the difference between success and failure. In this euphoria of IPOs, SEBI, exchanges, and ace investors aren’t wrong in holding companies accountable. As stakeholders, it’s important to work with businesses that have genuine models and sustainable profits. 𝗥𝗲𝗺𝗲𝗺𝗯𝗲𝗿, 𝗰𝗵𝗮𝘀𝗶𝗻𝗴 𝗳𝗮𝘀𝘁 𝘀𝘂𝗰𝗰𝗲𝘀𝘀 𝗰𝗮𝗻 𝗼𝗳𝘁𝗲𝗻 𝗹𝗲𝗮𝗱 𝘁𝗼 𝗳𝗮𝘀𝘁𝗲𝗿 𝗳𝗮𝗶𝗹𝘂𝗿𝗲. #SMEIPO #InvestorAwareness #FinancialGovernance #LongTermSustainability

Against a backroad of more subdued PE activity starting from around Q2 2022, take privates (publicly traded company is purchased and converted into a privately held entity, typically through a buyout by a PE firm) and carve-outs (larger company divests a subsidiary or business unit, which then operates as an independent entity, often with PE investment) are still a significant source of dealmaking, accounting for ~20% of global activity by value in 1Q 2024, compared to ~5% in 1Q 2023 and ~11% in 4Q 2023. Transactions continue to be driven by strategics rationalising their businesses and raising cash to invest in core competencies as well as GP optimism that companies’ non-core assets can be lucrative additions to their portfolios. The majority of deals are happening in the tech space. The financial sector is also increasingly driving deals, with its share of transactions rising from 6% to 16% over the last 12 months. Insurers, brokers, wealth managers and regional banks are of particular interest to sponsors. Link in comments👇

The Roadmap to Public: US IPO Documentation For more details, visit: https://lnkd.in/e8znuuUG #IPOdocumentation #investmentbanks #financialstatements #duediligence #underwriting #outsourcingservices #magistralconsulting

“Financing the Next Lap of Growth” discusses the strategies entrepreneurial companies can use to secure financing for their next phase of growth. It highlights the benefits and challenges of going public through an IPO, such as accessing permanent capital and enhancing corporate governance. The article also explores alternative financing options like private equity, which can provide tailored solutions without the need for regular interest payments. https://lnkd.in/g-aigCcB

What is EBITDA? → Earnings Before Interest, Taxes, Depreciation, and Amortization. This is a key metric to measure a company’s financial performance. By excluding financing and accounting decisions, EBITDA offers a clearer profitability picture. Why use EBITDA? > Comparing Companies: Excludes financing effects for accurate comparisons. > Debt Servicing: Estimates cash flow available for debt. > Valuing Companies: Basis for valuing in buyouts and mergers. > Performance Analysis: Tracks trends in profitability. However, remember that EBITDA excludes real expenses and can be manipulated. Always use it with other financial measures. Follow A2D Ventures for more #SG #A2DVentures #EBITDA #Finance #Investing

An article from Sal Piscopo taking a look at the current deal landscape in software and technology private equity and M&A. #mergersandacquisitions #privateequity #venturecapital #technology #software

Preparing for an IPO? Start functioning as a public company now! Conduct a readiness assessment, build a detailed roadmap, and involve key stakeholders and advisors. Establish robust infrastructure, ensure accurate financial reporting, and develop effective investor relations and compliance processes. Early preparation is crucial for a smooth transition. Learn more about the steps to success in this Protiviti article. Read the full article below.

Exec-Rem analysed Pre-IPO equity grant practices in 179 companies that had filed Final Offer Document with ROC between April 2021 and June 2024. Here are some key insights: 1. 58% Companies formulated equity compensation plan(s) prior to the IPO 2. Out of the companies having equity compensation plan(s), 89% Companies made grant(s) prior to IPO, while 11% Companies had a plan but did not make grants. 3. Of companies that made grants, 95% companies had also made a grant within one year prior to the IPO. 4. In companies having a plan Pre-IPO, median pool size was 3.9% and within that for companies where PE/VC was exiting through OFS, the median pool size was 4.5% For more insights, download our article from research centre: https://lnkd.in/drZgV23g #executivepay #executivecompensation #equitypay #IPO #equitycompensation Anubhav Gupta I Vishnunarayanan Namboothiri

This post educates about the strategic shift in private equity firms towards driving value growth through margin expansion in their portfolio companies. With rising financing costs and decreased valuations, #PE firms are focusing on enhancing margins to boost profitability. At ERA Group, we specialize in driving operational efficiency and profitability to support this essential aspect of value creation. #marginexpansion #privateequity #operationalgrowth #valuecreation

We are at the beginning of an fascinating time in the #wealthmanagement industry. The confluence of interest rates coming back down, technological advancements and the aging out of older #wealthadvisors, means M&A activity is only going to accelerate, particularly in the #RIA acquisition space (a recent WealthManagement.com reports 38% of M&A in 2024 come from RIAs). As we've seen in the last few years from accounting firm consolidation, the need to have scalable ways (i.e. standardized processes and tech stacks) to service more clients in a personalized way is going to be top of mind to realize the return on these acquisitions (we're already seeing firms fail to do this). Read how interVal can be used to support with this here https://lnkd.in/gqDRTyd6.