Taylor Swift may have left Toronto and Vancouver, but we’re not done with her yet! MT❯Ventures has published a series of Taylor Swift-inspired legal articles as a tribute. Here’s our final post of the series! We hope you enjoyed these insights as you grow your startup during this exciting time of year.

Taking your company public or selling it is a founder’s “Wildest dream.” After countless hours of work, you're ready to enjoy the rewards. Here are some tips to prepare your startup for an IPO or sale.

1. Know Your End Goal

Consider your reasons for selling or going public, and determine which option suits you best. Is liquidity your main goal? Would you like to receive a payout and cease your involvement in the business? In that case, the sale option might be the best and most appropriate. IPOs do not create liquidity for the founders, instead they allow the founders to access more funding in order to grow the business at an exponential rate. If you want to continue to build your business and play the long game, then an IPO is for you.

Both options have their pros and cons. Selling your company transfers control to someone else, but it provides you with capital for a new venture, retirement, or any other pursuit. If you take your company public, you’ll remain involved in the company and can continue executing on your vision. However, be prepared to adhere to numerous securities regulations, stock exchange requirements, and address the concerns of external shareholders.

2. Start Early

The process of going public or selling a company often takes longer than anticipated. From the initial contemplation, it may take a year or more to reach fruition. Deal structuring, due diligence, and marketing are essential steps that require significant time and effort. This process is inherently complex, involving intricate legal and economic considerations. Engage advisors early on – including lawyers, investment bankers, and accountants – to guide you through every step, ensuring a smooth and successful transition.

3. Enhance Your Company's Acquisition or IPO Appeal

The last twenty-four months have been much about right-sizing the business. Investors and acquirers alike are looking for profitability and predictability. Unlike the early 2020s market where ideas and growth were sufficient to make a company attractive, you’ll need to demonstrate growth, product market fit and profitability in today’s market. Companies should focus on robust financial planning, building a strong, loyal customer base, and market penetration. Gone are the days of acquisitions or IPOs based on ideas and growth; today’s markets require consistency, profitability, and predictability.

4. Assess Your Team

Where you are considering an IPO, be sure to have the appropriate internal management team in place. An IPO is no small feat. The CEO and CFO of your company will continue to manage the day-to-day business but will also be responsible for the influx of diligence requests coming from the lawyers, investment bankers, accountants and other external advisors. Assess your team and determine if you need to add additional staff or temporary resources. Consider whether the internal team has sufficient experience to handle a public listing and consider the additional resources or levelling up that your team will need to do.

5. Assess the Market

It's critical to choose the optimal time for selling or going public. Consult with advisors to evaluate if the current moment is favorable. Economic conditions and industry trends will significantly influence this decision. For example, artificial intelligence startups have recently attracted significant attention, resulting in higher valuations. At the same time, very few businesses have gone public in the last 24 months. Analyze the present market environment, considering your specific business, and decide whether it is better to proceed now or at a later date.

MT❯Ventures: Your Backstage Crew

Taking your company public, or selling privately, is one of the most exciting milestones in an entrepreneur’s journey. Although the process may be thrilling, there are countless legal and regulatory considerations which will make the process daunting. At MT❯Ventures, we strive to provide the legal smarts and strategic counsel that startups need to help you grow and focus on the vision. We will guide you through this process, helping you reach your wildest dreams as an entrepreneur.