IPO strategies for knowledge based firms

Abstract

The project makes an effort to come up with a framework for understanding the IPO strategies of firms in the knowledge industry. The study mainly focuses on the Software I IT industry (including ITES) and the Pharma I Biotech Industry for the analysis. Most of the available literature and study is based on studies carried out in the more mature capital markets of the world like the US and European markets. In light of this, the lack of a study focusing exclusively on the Indian market appeared as a gap 0 us. This particular study aims to plug this gap, and also validate whether the factors that playa role in other markets are relevant in the Indian context. After a detailed study we identified that three key perspectives, firms' perspective, investors perspective, industry perspective govern the firm's IPO decision. The factors that impact an IPO decision in the decreasing order of importance were identified as, stage of the business and growth strategy of the firm, predictability and scalability of the firms revenues, management control concerns - strategic investors vs. retail investors, exit pressures from current investors, need for funds for firm's strategic objectives, inability to access other forms of capital, business and process maturity, IPO as a means to create a brand identity, peer pressure to list, offering liquidity to stakeholders.