IPO Failure Case Study—The Case of Logicreation

Abstract

China's economy has shifted from a high-speed development stage to a high-quality development stage, and there is an urgent need for scientific and technological innovation to promote high-quality development. Since August 24, 2020, when the first batch of enterprises under the registration system of the GEM board were listed on the market, as of August 20, 2023, a total of 345 enterprises on the Shenzhen Stock Exchange have terminated their IPOs, and the reasons for the failure of their IPOs are more or less the same. In this paper, we take Beijing Logicreation Information & Technology Co., Ltd. (hereinafter referred to as Logicreation) as a case study to deeply investigate the reasons behind its IPO failure. By analyzing the information disclosed by the case company in the GEM audit, it is found that the reasons leading to Logicreation's failure to meet the requirements of the IPO audit can be broadly divided into two aspects. On the one hand, it is due to business compliance issues, while on the other hand, it also lies in its own unstable profitability. In view of the reasons for the failure of Logicreation's IPO, this paper suggests that the company should improve its internal control and clarify the relevant standards, improve its product structure and its profitability, so as to be ready for the next IPO filing. At the same time, it gives other enterprises to be listed a certain experience to learn from, and improves the chances of success of GEM IPO.