Do I Really Need a Virtual Data Room for my IPO?

Successful operation of the enterprise is impossible without obtaining reliable information, new realities imply new priorities and require new management methods. In this article, we will analyze the relo of virtual data room in IPO deals.

What is an IPO?

An initial public offering, or IPO, is the first public offering of shares to the general public. Any company can raise capital by issuing shares or debt securities. If the company has never issued public subscription shares before, then such an offering is called an IPO.

The placement of shares on one of the world’s leading stock exchanges is considered very prestigious. Previously, only private companies with impeccable financial performance could apply for an IPO, and it was not at all easy to get listed on the stock exchange. But the boom of Internet companies turned everything on its head. Today firms did not need to demonstrate good financial performance and successful history of development to enter the stock exchange. On the contrary, IPOs began to be carried out by owners of small startups who wanted to expand their business.

It is necessary to prepare the company for the IР0, at least two or three years in advance, according to the set of “features” in a particular company. Moreover, owners and top management do not always clearly realize that the process of initial public offering entails the transformation of a closed company into a public company, which requires transparency in all aspects of doing business.

From an investor’s point of view, the main advantage of public companies is that their shares are freely traded on the market, like any other commodity. If you have money, you can always invest it. Even if the CEO of a company hates you with every fiber of his being, he can’t stop you from buying its stock.

Virtual data room for IPO deals

Buying shares of a company at the IPO stage is always a risk. The organization is just entering the market, and how it will manifest itself is a big question. Much also depends on the valuation of the company. Therefore, on the eve of an IPO, it is necessary not only to put in order all the internal and external activities of the company but also to prepare speakers for direct and regular interaction with the investment community. Thus, due diligence procedure takes place here. To simplify this procedure, companies use virtual data room software as a secure repository for confidential documentation and a reliable collaborative environment.

Modern data room solutions allow companies to optimize the process of interaction with customers, as well as create an effective mechanism for managing marketing, sales, and service. The synthesis of enterprise management software is one of the first tasks facing the founders of modern enterprises.

If we consider a data room as a set of technologies, it is a set of applications that are connected by single business logic and integrated into the information environment of the enterprise based on a single database.

The market advantage of companies using data room is obvious at least in the fact that:

  • managers work in a single information space;
  • marketers see the results of marketing campaigns: exhibitions, advertising campaigns, seminars;
  • management has the opportunity to analyze the work of the company with customers: revenues from deals, costs of various marketing campaigns to attract customers.