IPO (Initial Public Offering) not only opens opportunities for capital raising and enhancing brand position but also brings a series of new obligations and pressures. Becoming a public company means that enterprises must meet strict standards of governance, transparency, and legal compliance. So, when entering the process of listing shares, what are the biggest challenges that companies must prepare to overcome?
1. Disclosure obligations
In addition to strategic benefits, an IPO also places companies under numerous new obligations. First and foremost is the requirement for transparent disclosure according to public company standards: financial statements, executive compensation, key contracts, and other information. This helps build trust with long-term strategic investors, but at the same time may expose sensitive data to competitors, customers, or suppliers.
2. Compliance costs and obligations
Companies issuing shares must bear the costs of maintaining public company standards, including hiring independent auditors, operating a governance system with independent board members, and submitting periodic reports to regulators. These are recurring annual expenses, not to mention the costs of market communication strategies to maintain corporate image and shareholder confidence.
3. Market pressure
Once listed, business results are closely monitored by shareholders and the market. The Vietnamese capital market requires companies to sustain stable growth strategies and frequently report results, creating significant pressure on management. In many cases, this pressure leads companies to prioritize short-term objectives over investments in long-term competitive advantages.
4. Restrictions on share sales
After an IPO, selling all shares is often restricted by legal regulations and market practices. It may take years for shareholders to fully divest. If market valuation does not outperform large-scale M&A deals in the private sector, selling to a strategic investor may be the optimal choice for faster capital recovery.
IPO is not optimal for every enterprise
Not every company is suitable for listing. Some adopt a dual-track process - conducting both IPO procedures and seeking acquisition partners simultaneously – to increase options and negotiation leverage. Many companies have nearly completed IPO processes but ultimately chose private sales due to more favorable conditions.
Private companies hold considerable advantages: keeping financial reports confidential, not disclosing executive compensation, saving compliance costs, and maintaining strategic flexibility. In addition, they can execute large-scale M&A transactions without audited reports, ensuring speed and information security.
Choosing a reputable advisory partner
IPO An IPO is a major opportunity but also a long-term commitment to shareholders and the market. Enterprises need thorough preparation in legal, financial, governance, and IPO strategy aspects to mitigate risks and maximize benefits. With expertise in financial and legal advisory , IVLF provides IPO solutions tailored to each issuing company, from capital structure planning, filing preparation, governance compliance to market communication. The goal is to ensure successful listing and sustainable competitive advantage in Vietnam’s capital market.
Contact information
IVLF International Consulting Company Limited
Hanoi Office:
📍 R1.7 Eden Rose Urban Area, 908 Kim Giang, Thanh Tri District, Hanoi
📞 (+84) 936 726 065
✉️ info@ivlf-advisors.com
Ho Chi Minh Office:
📍 4/17, HT02 Street, Hiep Thanh Ward, District 12, HCMC
📞 (+84) 936 726 065
✉️ info@ivlf-advisors.com
Contact IVLF for consulting and support in your transactions!
