Strategic Advice 10 steps to get ready for an IPO

A step-by-step guide to take your company public and set it up for future success

As your company grows, you have several strategic options to help continue it on its trajectory forward. One of those is undertaking an initial public offering (IPO). A successful IPO can elevate your company’s profile and its ability to raise capital. However, it’s one of the biggest decisions company owners face, because it also means significant changes as you take on additional shareholders.

“It’s a significant fork in the road,” says J. West Riggs, managing director and head of Equity Capital Markets at Truist Securities.

Considerations around the public/private decision

“It could be a desire to unlock capital for growth, or there could be a need for liquidity, either for the current shareholders or owners,” says Riggs. “Another reason could be to create upside for future or current employees. You have to think about the trajectory of the company and make sure you’re optimizing your capital structure. Ultimately, that often comes down to making the decision on going public vs. staying private and which one gives you the optimal cost of capital.”

Capital isn’t the only reason, though. As your company seeks growth, going public could allow you as a leader to maintain more control over the firm. “If you sell the business as part of a mergers and acquisitions (M&A) deal, you may well lose some of or all of that control,” notes Jim Pirouz, former head of Capital Markets, now head of Corporate Banking at Truist Securities. “If you go public, depending on how much you retain of the ownership, you’ll be able to continue to run the company.”

You have to think about the trajectory of the company and make sure you’re optimizing your capital structure. Ultimately, that often comes down to making that decision on going public vs. staying private.
—J. West Riggs, Managing Director and Head of Equity Capital Markets, Truist Securities

Riggs says that while there’s a sense of “making it” as a company when you ring the opening bell on the New York Stock Exchange or NASDAQ, it’s critical for companies determining whether to pursue an IPO to have a “lens of reality” to understand what the potential outcomes are and how the public markets may actually view your company.

Once you’ve worked with your advisory team and come to the decision that an IPO is right for your company, the process demands meticulous preparation. Your internal management team and business units must operate with the mindset and discipline of a public company, both behind the scenes and in the public eye. This requires a cross-functional and holistic approach so your entire organization can thrive.

If an IPO is in your company’s future, here are some critical milestones and steps to get your company ready.

Pre-filing

1. Bring the right people together for a kickoff meeting.

Taking your company public requires a team of experts—auditors, lawyers, underwriters, accountants, and investment bankers—all working in sync. As a private company, your Truist investment banker may be your first point of contact. They can connect you with their capital markets teammates who will oversee the IPO process and make sure every step is aligned with your long-term business goals.

Investment bankers/underwriters collaborate closely with your finance team and legal counsel to prepare and refine your registration statement. They manage the technical aspects of your IPO, organize investor presentations, and structure underwriting agreements tailored to your needs, ensuring your offer resonates in the market.
Capital markets advisors are optional members of the team who can provide additional advice to help shape your equity story. Your Truist Securities team offers data-backed insights on pricing, marketing, and investor allocations.

Riggs says your team could include an industry banker, a leveraged finance partner, and an M&A specialist who can help you explore options beyond the IPO, because it’s always important to keep your options open, even if you think an IPO is your next move.

“It’s not a siloed process,” he says. “It’s everyone coming together to say, ‘OK, you’re thinking about an IPO, but is that the right solution?’ Sometimes an IPO could be combined with a loan or an M&A transaction.”

At this point in the process, you should hold an organizational meeting with your advisory team to discuss the offering process, establish responsibilities, and identify possible challenges.

2. Get your house in order.

Being ready for an IPO means meeting specific financial benchmarks—and there are costs involved with some of the preparation work. Thorough due diligence helps boost investor confidence and helps compliance with exchange requirements.

Here are some key financial aspects you’ll want to make decisions about to be ready to go.

Choose the exchange you’d like to be listed on. Companies aiming to list on NASDAQ or the NYSE need to meet minimum market capitalization figures, but the reality is you’ll want to be much higher than those to attract the most investors at the best pricing. Often, choosing which exchange you want your company to be listed on comes down to personal preference, but each may offer you unique benefits you can discuss with your Truist Securities team.
Underwriting fees and legal costs can vary depending on the size of your IPO. Your Truist Securities team can help estimate and then finalize these numbers.
Understanding your business segments can help your financial reporting accurately reflect all parts of your business. As you go public, you may need to break down your financials by different segments—like products, services, or geographic areas—as required by the Securities and Exchange Commission (SEC). This can help prevent regulatory delays.
Defining non-GAAP measures and KPIs can provide a clear picture of your company’s financial health and growth potential. These metrics should align with your equity story and reflect how you manage the business.
Management discussion and analysis (MD&A) provides context to your financial statements. MD&As can enhance transparency, helping potential investors understand the factors driving your company’s performance.

Too soon to take your company public? This graphic shows icons representing five alternative ways to raise capital to help you achieve your goals and they are Private equity, Venture, Strategic mergers and acquisitions, Debt financing and Revenue-based financing.

3. Know the heart of your story.

Your equity story isn’t just about numbers. It’s about telling investors who you are, which typically happens during a roadshow where you and your representatives spend days meeting with potential investors and analysts. Think about what sets you apart. Your Truist Securities team will work with you to craft a compelling narrative that resonates with investors and aligns with your long-term vision. You’ll use this narrative to help convince both equity analysts and investors of the value of buying into your company.

“One thing that does not get talked about enough is the importance of interaction with research analysts and investors prior to the IPO,” Riggs says. “The research analyst needs to be able to educate investors, so your interaction with them and building that relationship with the analyst community is incredibly important. They have to understand your strategic vision and get to know the management team on a more personal level.”

4. Prepare your S-1.

Draft a registration statement (Form S-1) that lays out your company’s financial condition, business model, potential risks to investing, and growth potential for the SEC and potential investors. Collaborating with your Truist Securities team and legal counsel will help streamline your registration statement so that it’s clear, accurate, and communicates your company’s strengths.

Initial submission and roadshow preparation

5. Submit your registration to the SEC.

You’ve reached a significant milestone in your IPO journey. The SEC will review your S-1 and request additional information. The weeks after you submit will most likely involve several rounds of revisions to your S-1.

6. Meet with analysts.

Before meeting with any potential investors, it’s important to develop relationships with the analyst community. These are the people who will eventually provide ratings on stocks that are used by investors to help determine what level of investment they may be interested in, and at what price. Analysts also help educate investors about your company. Ensure the analyst community understands what makes your company unique and what drives your vision.

7. Refine your presentation.

Craft a detailed presentation that highlights your strength, growth potential, and market positioning for when you go on roadshows. Your Truist Securities team can help you secure critical meetings and help you prepare your presentation.

8. Publicly file your S-1 and IPO documentation.

After receiving and addressing feedback from the SEC, if you’re ready to launch your roadshow, you must publicly file your S-1 at least two weeks before the start of it. Finalize all IPO-related documentation, including financial statements, business disclosures, governance documents, listing applications, and the underwriting agreement. Review and approve each document to ensure compliance and readiness for your debut as a public company.

Roadshow, pricing, and trading

9. Tell your story to investors.

It’s time for your roadshow to tell your story. You and your team must be ready to answer detailed questions about your business model, risks and mitigation strategies, details about the management team, and historical financial data. Roadshows typically can last two weeks.

10. Navigate how your IPO gets priced.

Truist Securities, potentially working with other partner underwriters, will gather orders and feedback from potential investors and use that information to determine the correct offering price. Once you agree on a price, sign the underwriting agreement and file the pricing amendment with the SEC.

Keeping your options open

Throughout the IPO preparation, your Truist Securities team will continue to help tell your story to other companies or private equity firms that may also be interested. By keeping both private and public offerings as an option, you create additional demand around your company, which may help your pricing. At any point up until the actual IPO itself, you may choose to pursue a private offering or M&A deal instead if it makes more financial sense.

“We advise clients to undertake a dual-track process because it helps maintain a level of tension,” Pirouz explains. “It keeps potential equity investors honest because if their valuation isn’t high enough, and the M&A market is willing to pay more, you can go that route. And conversely, it keeps M&A suitors honest because if they’re not offering enough, you can always go the public route.”

Operating in a post-IPO environment

An IPO is an exciting time for company owners and executives, often representing the culmination of years or decades of hard work. But going public is just the beginning of a new chapter, one that not only involves an infusion of capital but also heightened regulatory responsibilities and shifts in how your business operates.

Even before shares in your firm start trading, ensure you’re ready to run your business as a publicly traded firm. You’ll need to consider differences in quarterly reporting, compliance, and more. Keep in mind that if you’ll own shares when the company goes public, there’s typically a period during which you can’t trade those shares after the IPO.

You may find that your firm is also getting more visibility after going public, which means that engaging and communicating with investors is critical because it could impact your stock price and the value of your company.

“You’ll be judged through a different lens,” Pirouz says. “There will be an independent board of directors and the shareholders. Social issues may become more important, and those groups, if they feel dissatisfied, could always push for a change in management.”

After your IPO, work closely with your Truist Securities team to ensure that you continue to meet regulatory requirements and effectively leverage new capital. This new phase is about more than just financial growth. It’s about navigating the complexities of life as a public company and maintaining a positive trajectory in the public eye.

Thinking of taking your company public?

Your Truist relationship manager can connect you with a Truist Securities team who can help you meet your goals.

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Strategic Advice 10 steps to get ready for an IPO

Considerations around the public/private decision

Pre-filing

Initial submission and roadshow preparation

Roadshow, pricing, and trading

Keeping your options open