5 Key Steps of the IPO Process

The IPO landscape has evolved throughout the 2020s. In 2020 and in 2021, IPO activity soared due to an abundance of market liquidity, the rise of Special Purpose Acquisition Companies (SPACs), and the accelerated growth of the technology and healthcare sectors. However, post-COVID-19 in 2022 and 2023, we saw more muted activity as a result of the higher interest rates that generate lower company valuations and stock prices. In 2025, tariff uncertainty further dampened IPO momentum in the first half of the year.
 
Despite these headwinds, bankers anticipate a rebound in IPO activity across sectors and geographies in the second half of 2025 and into 2026, fueled in part by expected sponsor exits.¹
 
Organizations pursue IPOs for various strategic reasons: to raise capital for growth and expansion, enhance credibility and visibility, or to use stock as currency for acquisitions. Whatever the motivation, with IPO activity poised to rise, now may be an opportune time to revisit your goal of taking your company public.

Here are five essential steps to guide your company through the public listing process.

1. Assemble Your IPO Team

One of the first and most critical steps in preparing for an IPO is assembling the right team of professionals to guide the process. This typically includes appointing both an underwriter and a financial advisor, each playing distinct but complementary roles in helping your company navigate the complexities of going public.

The Role of An Underwriter

The underwriter, usually an investment bank, is responsible for managing the issuance of shares to the public. Their duties include structuring the offering, pricing the shares, and marketing the IPO to potential investors. Companies often conduct a competitive “bake-off” to select the lead underwriter, during which investment banks present their credentials, market insights, and proposed strategies for executing the IPO. The chosen underwriter may also form a syndicate of additional banks to help distribute shares and mitigate risk.

The Role of the Financial Advisor

Financial advisors also provide strategic guidance throughout the IPO journey. They help assess the company’s readiness to go public, support valuation analysis, and advise on capital structure decisions. Importantly, financial advisors often assist in the underwriter selection process, helping make sure that terms are favorable and aligned with the company’s long-term goals. They also help shape the company’s equity story (the narrative presented to investors) and prepare company leadership for investor interactions during the roadshow. Together, the underwriter and financial advisor form the backbone of a strategic IPO team, offering both tactical execution and strategic oversight.

2. Conduct Due Diligence and Prepare Regulatory Filings

Underwriters conduct extensive due diligence to ensure the company complies with the rules of the chosen exchange (such as Nasdaq, NYSE, or LSE) and the regulatory requirements of the Securities and Exchange Commission (SEC). This includes adherence to the Securities Act of 1933, which mandates full and transparent disclosure of all material information about the company and the securities being offered.²
 
This process is rigorous and can take several months. It involves verifying the company’s financials, operations, legal standing, and risk factors. If the registration statement is later found to contain misrepresentations, underwriters may be held liable, making this step critical to the integrity of the IPO.
 
Following due diligence, the company and its underwriters file Form S-1, the SEC’s required registration statement for domestic issuers offering new securities to the public. The SEC then conducts its own review, which can take anywhere from several months to a year.

3. Marketing the Offering and Gauging Investor Interest

During the SEC review period, the company and its underwriter begin working behind the scenes to build awareness of the company, its brand, and its products. A key part of this effort is the preparation of a preliminary prospectus, commonly referred to as a “red herring.” This document outlines the investment opportunity and includes essential information about the company’s business model, financials, operations, and associated risks. It earns its nickname from the red disclaimer printed on the cover, which notes that the information is incomplete and subject to change.

At the same time, the company and underwriter develop marketing materials for the roadshow, a series of presentations to institutional investors designed to generate interest in the offering. These events allow investors to meet company leadership, ask questions, and evaluate the business firsthand. Roadshows typically feature financial presentations, videos, interactive content, and supplemental collateral, all of which must comply with SEC guidelines, particularly around forward-looking statements and financial disclosures.

The feedback gathered during the roadshow helps the company and underwriter assess demand and finalize the IPO pricing strategy.

4. Develop Your Strategy for Pricing

Once the SEC approves the IPO, the company and its underwriter determine the effective date, the day the shares will officially begin trading. On the eve of this date, they finalize two critical components: the offering price (the price at which shares will be sold) and the number of shares to be issued. The offering price is a pivotal decision, as it directly impacts how much capital the company will raise.

Underwriters set the offering price based on a combination of factors, including:

• The company’s fundamentals and growth potential
• Valuation benchmarks from comparable public companies
• Market conditions and investor sentiment
• Feedback and demand observed during the roadshow (as recorded in the order book)

Pricing an IPO carries significant risk. If the offering is overpriced, the stock may drop sharply after listing, damaging market perception and leaving new shareholders with losses. If undervalued, the company may raise less capital than it could have, potentially disappointing early investors and employees who expected a higher valuation.

Because of these risks, pricing must be approached with careful consideration of both market dynamics and investor appetite. A well-calibrated offering price helps ensure a successful debut and sets the tone for the company’s future as a public entity.

5. Develop Your Strategy for Filing

Following the launch of the IPO, early investors and insiders are subject to a lock-up period that prevents them from selling shares. This lock-up, which typically lasts between 90 and 180 days, also restricts insiders from sharing new information about the company, helping ensure that all material disclosures are contained in the final prospectus. During this period, the company begins trading publicly, often experiencing significant stock price fluctuations driven by market sentiment and investor demand. Underwriters may step in to stabilize the price if needed.

The company also starts fulfilling its new regulatory obligations, including filing quarterly and annual reports with the SEC and adhering to public company compliance standards such as the Sarbanes-Oxley Act. Investor relations become a key focus, with the company initiating earnings calls, publishing financial updates, and engaging with analysts who begin issuing coverage. Internally, leadership may adjust strategies to align with shareholder expectations, emphasizing transparency, profitability, and long-term growth. This phase marks the company’s full transition into life as a publicly traded entity.

How to Partner with Your Advisor

Navigating the IPO process is a complex and high-stakes endeavor, but with the right financial advisor, companies can approach it with confidence and clarity. From the earliest stages of readiness assessment to the final transition into public markets, financial advisors serve as strategic partners, helping businesses shape their equity stories, evaluate valuation scenarios, and make informed decisions about capital structure and timing. They play a pivotal role in selecting and negotiating with underwriters, preparing leadership for investor engagement, and ensuring that regulatory filings and disclosures align with long-term goals.

As companies face new pressures and opportunities in the public arena, financial advisors continue to provide guidance on investor relations, compliance, and market positioning. For business leaders considering an IPO, partnering with a seasoned financial advisor can be the difference between a successful debut and a missed opportunity, making them an indispensable asset throughout the journey to becoming a public company.