I read this article about how a company was ready to go public and I thought it was interesting. From what I understand going public must be a timely decision. Completing an IPO too early can have disastrous effects on the future health of you’re the business and waiting too long might allow a competitor to steal your thunder.

There used to be a standard that companies were ready to go public when they reached $100 million in annualized revenue. At that point, it is assumed that the company 1) is able to handle competition and 2) earn a large enough market value to enable the company to sell enough stock to institutional buyers in its IPO, without suffering massive dilution in the process.

In this article the keys to knowing when you are ready are:
• Predictability & Visibility
• Underlying Growth Potential
• Vulnerability Assessment

According to this article, it doesn’t matter what if you have $ 200 million in revenue if you can not predict, with high precision, what next quarter or next year is going to look like. Once you are public, if the company misses guidance or analyst expectations by 3%, stock will likely plummet, often causing employee morale to suffer and competitors to be emboldened. Additionally, the company must be aware of their growth potential because the IPO is not the end goal. The company may not know all the growth vectors they plan to open up in the future, but they should have a game plan before the IPO. The best companies have no single points of failure. Public investors hate when companies have all of their eggs in one basket. Risks like having 1 or 2 large customers, a dominant supplier or distributor, huge competitor, or if the company is limited to single platform, technology or regulatory regime gives other companies the ability to extract a lot of value once they realize the comply relies on them.

http://fortune.com/2013/02/25/is-your-company-ipo-ready/