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Diversification: the mantra of modern business
To recommend optimal timing for IPO in a dynamic business market is like trying to shoot in wild darkness, without surety of any outcome
. The best time for a PSU to come out with an IPO will be the one when it is completely prepared for the same.The initial public offering (IPO) is the first sale of a stock by a private company to the public. IPOs are generally used by smaller companies raising capital to expand, but can be done by large private companies who want to be publicly traded. A study of the history of IPO's of Public Sector Undertakings has helped to conclude that the company has to start planning for IPO today and then it will be able to come out with an IPO in the next two years. This process includes a host of activities which are time consuming.
The company should come up with IPO when it has very strong fundamentals so that it can create value for the shareholders. Although the company might have good fundamentals right now but it needs to improve its profitability. US IPOs carry a certain mystique. They also carry a lot of baggage, namely very high cost and tons of legalese. Wading through the morass of paper can challenge even the most even-tempered business person.
One more thing has to be taken into consideration when the company plans its public offering and it is the performance of the broader markets, i.e. the stock markets in the company. It is difficult to plan about the stock markets as they are unpredictable but still the company has to discount its performance.
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Diversification: the mantra of modern business
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