Going public is a year-plus-long process.  While you generally will hire investment banks to begin S-1 drafting about five to six months before your anticipated IPO, experienced take-public CFOs know that there is substantial work to be accomplished beforehand — from PCAOB audit readiness, to implementing the right accounting, controls and reporting software, to establishing a public-ready investment narrative, and building and deepening relationships with bankers, potential public investors, and Wall Street research analysts — management teams and Boards are best served by starting early. Doing so gives a company optionality as to timing on its terms.

Ibotta, one of the most innovative digital promotion and performance marketing companies, went public this past April, raising proceeds of well over $600 million, of which nearly $450 million went to existing shareholders. The IPO came at a time when very few companies were going public, and valuations of their peer group were well below prior periods. CEO Bryan Leach stated recently in an interview with Tech Crunch that he had zero regrets as to timing, and gave great advice when he said, “At the end of the day, it's not a destination, it's a phase.”

Your investment banks do a great job in so many ways. However, the fact is that one of an investment bank's primary objectives is to get a transaction done that maximizes proceeds. No banker wants to feel or hear that they ‘left money on the table’ post-transaction.  It's completely understandable from their standpoint, especially in recent IPO cycles. But Bryan at Ibotta understood that, while the IPO is a transformational event, it merely begins a new phase in the life of a company; that an IPO is a critical branding event on a continuing journey that can meaningfully improve their competitive edge versus competition, attract and retain talent, force greater institutional rigor, build new trusted relationships with institutional investors and open up a meaningful new channel for capital.  

Trying to time the markets to achieve a high valuation and maximize proceeds can, in fact, be a double-edged sword, as public investors are buying at a high initial valuation for a company they don't know that well, and the company then needs to defend that valuation by prioritizing near-term results. We were made all too aware of this in the 2021 IPO/SPAC boom, where long-term-oriented funds were quick to unload newly public stocks instead of buying more in the aftermarket, and many companies gave out guidance that was too aggressive in the near term.

Which brings me back to readiness. My 30-plus years of helping to execute IPOs, investing in them, and now advising companies and sponsors on that path has taught me that there is never a perfect time to go public, and no one can perfectly handicap the markets, the economy, or exogenous geopolitical factors. Going public has so many benefits beyond proceeds, and companies are best served by early, deliberate, and comprehensive readiness well before the markets deliver opportunity, and waiting too long puts a company at risk of missing windows before they close. Be the early bird…