IPO companies increase their working capital and obtain financing for their investments. Recently, IPOs have been very popular among Turkish companies and investors. After the application and review process is completed, companies that start trading on Borsa Istanbul increase both their recognition and value. At this point, the question 'what are the conditions for going public?
Going public/IPO is when a company acquires new shareholders by selling some of its existing shares on the stock exchange or by increasing the company's capital. Going public offers companies the opportunity to raise capital, close liquidity gaps, develop growth strategies and finance their investments. What are the conditions for going public? Going public can be realized on the condition of complying with various laws, legislation, regulations and principle decisions.
PRE-IPO PREPARATION
Before going public, a company needs to complete the preparation process. For this, there are a number of processes to be considered:
Review of Financial and Operational Status: A company planning to go public should carefully evaluate its financial position and operational efficiency. In an IPO, the financial position of the company is expressed in TFRS-compliant financial statements and reports. These financial statements and reports should be subject to special purpose independent audit by an independent audit firm.
Internal Preparations: Although institutionalization is one of the objectives and results of going public, companies targeting an IPO must have an administrative and operational organizational structure that is suitable for institutionalization.
WHAT ARE THE CONDITIONS FOR GOING PUBLIC?
Objectives of the IPO: Companies must specify the purposes for which they will use the proceeds of the IPO. These purposes generally include strengthening working capital, liquidating or reducing financial debt, financing investments and supporting aggressive growth strategies such as mergers and acquisitions.
Capital Markets Board (CMB) Approval: A company wishing to go public in Turkey must fulfill the conditions set by the Capital Markets Board (CMB). The CMB reviews and approves the public offering application. During the review process, the CMB evaluates the financial status of the company, the sustainability of its activities and its legal status.
Public Offering Prospectus: The IPO prospectus is a document that provides investors with detailed information about the company, shareholders, managers, financial situation, risks and future prospects. The prospectus must be reviewed and approved by the CMB. The approved prospectus must be announced before the public offering for investors to review.
Determination of Stock Price: Determination of the share price is one of the most critical stages of the public offering process. It is determined by the Price Determination Report prepared by the intermediary institution intermediating the public offering and must be announced before the public offering for investors to review after the approval of the prospectus. The price is based on factors such as the company's financial performance, the financial performance of the sector(s) in which it operates and the company's future growth prospects.
Equity Distribution Strategy: How the shares will be distributed needs to be decided and announced before the IPO. This strategy includes the amount of shares to be offered to investors, the priority investor groups and the geographical distribution of the IPO. The company usually maintains a balance between institutional investors, individual investors and foreign investors. This balance is determined by equal distribution or proportional distribution.
After the approval of the prospectus by the CMB, investors open their accounts with brokerage houses to request the shares they wish to purchase on the determined demand collection dates. After the demand collection (public offering) process is completed, the shares start to be traded on Borsa Istanbul on the specified day. Once the shares start to be traded on the stock exchange, the company gains a publicly traded status and is obliged to be subject to regular independent audits and to publish its financial reports.
As a public company, it is required to fulfill obligations such as regular financial reporting, independent audit, compliance with corporate governance principles and investor relations. These obligations increase the transparency of the company and ensure investor confidence.
Going public is an important financial and strategic step for companies. This process must be meticulously planned and managed. The company's financial health, operational efficiency, compliance with legal requirements and ability to communicate effectively with investors are critical to the success of an IPO. The IPO process enables the company to achieve its growth targets, increase its market capitalization and operate in compliance with corporate governance principles.
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