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What Really Matters for a Premium IPO Valuation?
Report

What Really Matters for a Premium IPO Valuation?

Jens Kengelbach, Uwe Berberich, Timo Schmid, Dominik Degen and Axel Dickenbrok
Boston Consulting Group, 2018
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Editorial Rating

8

Qualities

  • Analytical
  • Overview
  • For Experts

Recommendation

What makes an IPO successful? One often-used measure is a company getting a top price at the time of the offering. Some obviously desirable corporate milestones, such as revenue growth and solid margins, appear to play a big role in IPO premiums. But other factors may not add as much as people think, while still other aspects that seem less important to the naked eye can make an impact. Entrepreneurs and leaders of start-ups will find premium value in this report from professionals at the Boston Consulting Group.

Take-Aways

  • A study of European IPOs finds that companies that score well on marquee measures, such as solid income growth or attractive returns, are more likely to fetch a top price at offering. 
  • Three factors can add to an IPO price: the company’s size, its structure and the presence of “anchor investors” like venture capital and private equity firms.
  • The factors that have little effect on premium valuations include an IPO’s timing, how many underwriters it has and the new company’s innovation history.

About the Authors

Jens Kengelbach et al. are professionals with the Boston Consulting Group. 

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