Inderes’ Principal Analyst Sauli Vilén looks for, among other things, a company’s competitive edge in its IPO. It is crucial to identify the factors that make a company better than its competitors right now and in the future. Don’t miss Vilén’s tips for companies making an IPO!
There is demand for the expertise of Inderes’ Principal Analyst Sauli Vilén. Functioning as a market middleman between companies and investors, Vilén first serves as an analyst, offering his own views on company IPOs, and then provides his fully-prepared data.
Even though investors always make their own decisions, the appraisal made by a financial analyst ultimately has a major impact on them.
“I form an understanding of a company by making use of its own materials, its competitors’ materials, industry materials and global economic outlooks,” says Vilén, explaining his approach.
According to Vilén, the entire analysis starts with questions pertaining to business: What is the business based on? What kind of strategy does the company have?
“First, you have to form an idea of the company’s business. You have to see where it might be headed. Only then can you estimate what the company’s IPO valuation will be in reality
Life on the stock market is like marriage
In addition to management and ownership structure, Vilén also looks for, among other things, a company’s competitive edge in its IPO. Without this edge, the company will not earn above-average capital gains.
“It is crucial to identify the factors that make a company better than its competitors right now and in the future. Even where a good business is concerned, it’s just not worth it to pay too much. It’s very simple,” advises Vilén.
According to Vilén, a company’s IPO can be compared to getting married.
“The work certainly doesn’t end with the IPO itself – that’s just the beginning. The IPO phase is definitely a trying process, but life on the stock market requires continuous engagement. Above all, it demands constant effort,” explains Vilén.
A strong story has value
Vilén points out that there are just under 200 companies on the stock market vying for investor attention. In order for a company to have a high profile in the IPO phase, it has to have a strong backstory.
“A good investor story offers an indication of what the company’s growth potential will be if its strategy is realised. The story explains why a company outperforms its competitors. It should also talk about the company’s earlier successes.”
Vilén stresses that the company must clearly state in its IPO what it intends to do with the investors’ money. Ideally, the money will be used in a way that supports the company story.
“However, some companies are quite simply more interesting than others. That’s why a company making an IPO has to work constantly and over the long-term. It has to reach investors and maintain contact with analysts,” says Vilén.
Communications can be the key to success
Vilén emphasises that companies with an open approach to business always have the advantage. The more open a company is, the better. Indeed, high-quality investment communications can be a major step toward achieving success.
“The opportunities afforded by digitalisation should be put to use in reaching investors. Even a small company can enjoy an extremely high profile, for example, on social media. Podcasts, webcasts, videos and newsletters also help. Exposure is no longer merely a question of money,” states Vilén.
According to Vilén, too many companies gear their communications more toward lawyers than investors. He also encourages companies to be transparent when presenting relevant issues to the market.
“A company’s strategy should be properly presented, explaining how progress was made in implementing it during the previous quarter. It’s extremely difficult to model a company that has several segments, but still reports everything in one bunch,” says Vilén.
Vilén’s tips for companies preparing for an IPO
- Come up with an interesting investor story.
- Explain why a company outperforms its competitors.
- Clearly explain where the money will be used and what will be done.
- Make use of digital channels in your communications.
- The more open a company is, the better.
Sauli Vilén
- Who: Principal Analyst with Inderes. Has been with the firm since its inception. Vilén follows the financial sector and trade.
Inderes
- What: Equity research company founded in 2009 whose goal is to promote the function of capital markets by serving as an information link between investors and companies.
- Inderes monitors and analyses, among others, Talenom, which is part of the Tesi portfolio.
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