After years of false starts, the Initial Public Offering (“IPO”) market is showing real signs of life. Inflation rates have come down significantly from their 2022 peak, and the volatility that has troubled investors for much of the past three years is settling down. Sidelined capital is finding its way back and, with it, a renewed appetite for new public offerings.

The primary regulator of the public equity markets – the U.S. Securities and Exchange Commission (“SEC”) – is also doing its part to encourage more companies to access the public equity markets. The SEC, as part of its “Make IPOs Great Again” initiative, has recently released two proposals to reduce the regulatory burden on public companies and make access to the public equity markets more attractive. The first proposal would allow companies to formally report through SEC filings semiannually rather than quarterly. And a second proposal would ease some of the more onerous regulatory and reporting requirements for smaller and newer public companies.

While geopolitical uncertainty remains heightened, the current economic climate is prompting a recovery, as lower inflation and interest rates enable investors to allocate more capital. Private equity also plays a key role, with sponsors holding onto portfolio companies longer than usual due to unfavorable exit conditions during the last few years. This backlog increases pressure to pursue an IPO or strategic sale.

However, valuations have reset. The era of companies valued at 20x revenue or greater based solely on growth prospects is gone. Today’s market prioritizes a credible path to profitability, and companies that haven’t adapted may struggle to convince investors.

The Best Time To Start? Yesterday.

When a company decides to pursue an IPO, the process typically runs five to six months from start to finish. It begins with an organizational meeting, followed by the filing of the initial registration statement (Form S-1) four to six weeks later, and then proceeds to a three- to four-month SEC comment period, depending on the number of comments and the Company’s ability to address them. But the real preparation should start 12 to 18 months before any of that.

Timing the IPO window is nearly impossible. What is possible is being ready when the window opens. Companies that wait to get IPO-ready until the window is open often find themselves either rushing to get on file or watching it close before they can move. The preparation has to happen before the urgency does.

The Readiness Gaps Slowing Companies Down

Time and again, the same issues surface late in the process: ones that felt manageable in the abstract but create real drag once a company decides to pursue an IPO. Readiness for that plan of action ultimately comes down to three things: 1) the right people; 2) the right processes; and 3) the right systems. That’s why organizations should ensure everything “FITS” before they file:

  • Financial Statements and Financial Close Process. Private companies may rely on certain private company elections that need to be unwound before going public. Preparing financial statements in accordance with Regulation S-X often takes longer than expected, including obtaining an audit at lower materiality thresholds as required under the Public Company Accounting Oversight Board (“PCAOB”) standards and preparing quarterly financial statements. Where possible, automate manual close tasks so the team can shift focus to the investor-facing analysis that actually moves the needle. Speed matters, too. Many private companies take 10+ days to close the books, while best-in-class public companies do it in five to seven. That gap needs to close before the offering, not after.
  • Internal Controls. Even Emerging Growth Companies not yet required to comply with SOX 404(b) still need a strong internal control framework. CEOs and CFOs sign 302 and 906 certifications affirming the accuracy of their financial statements, which require effective processes to support those representations. Under PCAOB standards, auditors must also gain an understanding of the control environment through walkthroughs and reviews of control documentation.
  • Tax Structure. Changes to a company’s tax structure can significantly impact financial reporting and often arise late in the process, when there is the least room for disruption. Pre-IPO conversions, entity reorganizations, and intercompany arrangements all have accounting implications that must be addressed well before drafting the Form S-1. The goal is to identify the target structure early, align tax and accounting advisors, and lock it in with enough runway to manage any reporting impacts.
  • Systems. Upgrading financial reporting systems is one of the most commonly delayed items on the pre-IPO checklist, and one of the most consequential. Companies should migrate to their target platforms before going public, not after. Switching post-IPO risks potential data gaps, missed deadlines, and damage to investor confidence built during the offering. Tools like Workiva or ActiveDisclosure are worth evaluating well before filing.

The Foundation Comes First

Remember, the day job doesn’t stop during an IPO. Finance and accounting teams are simultaneously assisting in the IPO process while also required to perform their day-to-day tasks and keep the business running. That’s precisely why advisor selection deserves the same rigor as any other strategic decision. The right underwriters, legal counsel, and financial advisors not only have credentials but also understand the business and help tell its story in a way that resonates with public investors.

Ultimately, IPO readiness hinges on having the right foundations in place before the pressure peaks. Getting financial statements public-company-ready, building a real internal controls framework, upgrading systems ahead of time, and surrounding the organization with advisors who genuinely understand the business and the IPO process can’t be left until the final sprint. They’re the foundation on which everything else is built.

The window is opening. It has a history of closing faster than it opens. Start now.