How private equity-backed companies can prepare for IPO

Jackie Kelley, EY Americas IPO Leader discusses IPO readiness for private equity-owned companies.

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An IPO is often a desired exit for private equity-backed companies. Soaring valuations in sectors, such as technology and biotech have led business leaders to choose an IPO to secure both investment and trust from the public market. Companies that choose an IPO must prepare not only for the event itself but also to meet public market shareholder expectations around growth, transparency, accountability and performance.

An assessment of IPO readiness is a critical step in ensuring a company is prepared not only to enter the public markets, but to be successful in both the short and long term.

Key takeaways

• Start discussions about IPO readiness 18-24 months in advance.
• Team with experienced advisors who have seen the pitfalls and know how to avoid them.
• Invest to mature back-end infrastructure, build/scale critical processes and acquire the talent needed to run a predictable business that will continue to scale and can meet the regulatory compliance requirements of the public market.
• Focus on creating a strong foundation for both the IPO and for the company’s rapid growth post-IPO.
• Private Equity investors should not expect to fully exit at the time of IPO as existing shareholders are expected to remain invested for a few years.