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IPO success demands more than growth—governance, reporting, and readiness pitfalls can be avoided with early planning and a strong strategic foundation.
In brief
- Build strong governance, controls and financial reporting early to meet regulatory demands and avoid last-minute IPO roadblocks.
- Align leadership, advisors and stakeholders to enable clarity, speed and confidence throughout the listing journey.
- Prepare for public scrutiny with robust systems, disclosures and investor-ready strategies to sustain long-term value.
Going public is an exciting milestone, but many Initial Public Offering (IPO) listing journeys get delayed or derailed due to avoidable missteps rather than market conditions. Data for the CY2025 reflects that 92 companies filed Draft Red Herring Prospectus (DRHP) aimed at a mainboard listing wherein only 37 could subsequently complete their listing successfully. Twelve companies were unable to obtain a Securities and Exchange Board of India (SEBI) approval on their DRHP either because the DRHP was withdrawn or rejected by SEBI and 43 companies have sought approval but have not launched till date. Thus, several companies in their IPO journey do not falter because of weak market conditions or sentiments but due to lack of precise planning, expert guidance and common errors. Such missteps can occur at any stage of the process, i.e., at the pre-DRHP stage or post DRHP stage when the company is handling regulatory queries on DRHP or even at the stage of internal readiness when the company has not officially started the DRHP preparation and filing process.
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Chapter 1
Building a strong foundation before filing
Many IPO delays stem from readiness gaps that emerge long before the filing process begins. Early preparation can help companies avoid common pitfalls and stay on track for listing.
Many IPO setbacks originate well before the DRHP stage, making early planning, stakeholder alignment and organizational preparedness critical to a successful listing journey.
Underestimating internal readiness time
Key areas such as promoter and promoter group identification, promoter shareholding structure, cap table rationalization, IPO-ready corporate structuring, Employee Stock Ownership Plan (ESOP) planning and implementation, designation of Key Managerial Personnel (KMP) and Senior Management Personnel (SMP), as well as broader governance matters, should be addressed well before the official kick-off. Closing gaps in these areas typically takes around six months.
Selecting advisors based only on cost
Choosing advisors solely on commercial considerations can be risky. In addition to experienced advisors such as bankers and legal counsels, the success of an IPO also depends heavily on industry report writers, media agencies, independent chartered accountants, chartered engineers, virtual data room providers, Project Management Office (PMO) advisors, etc., who bring sector-specific expertise and execution capability.
Misalignment with investors
Shareholder agreements with investors often require amendments to remove preferential conversion rights. This necessitates careful planning by the company to negotiate revised terms, alongside navigating investors’ typically lengthy internal approval processes. Companies frequently recognize this requirement only after the formal kick-off, leaving limited time to implement such changes and often resulting in delays to DRHP timelines in the absence of timely investor approvals.
Weak financial and secretarial records
SEBI has consistently emphasized the importance of maintaining consistency and reliability in disclosed financial history, alongside a robust and defensible secretarial record-keeping framework (including approvals, statutory registers, filings and governance documentation), and has highlighted the implications of deficiencies in these areas.
Financial records that do not reconcile cleanly across periods, or a lack of strong secretarial discipline, may indicate a weak control environment. This often results in a prolonged and complex remediation process, including potential restatements and/or the need to file condonation or compounding applications with regulators.
Lack of stakeholder coordination
The intermediary ecosystem comprising banks, law firms and auditors, among others, often evaluates the same information through their respective lenses, which can result in misaligned narratives. A common point of divergence arises when the financial narrative (including unit economics and Management's Discussion and Analysis [MD&A]) is not aligned with the legal perspective (diligence findings and risk factors) or the bankers’ narrative (equity story and valuation). Misalignment may also surface in areas requiring multi-party signoffs, such as key sections of the offer document. Given the significant overlap and interdependence in developing and presenting information within the offer document, establishing seamless alignment among all stakeholders from the outset is critical.
Late discovery of compliance issues
SEBI has consistently emphasized the importance of disclosure integrity and has progressively expanded the scope of litigation disclosures through recent amendments, extending coverage to a broader set of KMP and SMP, in addition to the issuer, promoters and directors.
Timely identification and disclosure of litigation and compliance matters are critical to enable the working group to assess potential exposures, initiate appropriate remediation measures and facilitate comprehensive and accurate disclosures in the offer documents.
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Chapter 2
Navigating governance, compliance and disclosure expectations
Strong governance, robust compliance and credible disclosures are critical to IPO success. Early preparation helps issuers meet regulatory expectations and build investor confidence.
As regulatory scrutiny and investor expectations continue to evolve, issuers must establish their governance, compliance and disclosure frameworks that are fit for public markets.
Weak internal controls
An effective control environment is a critical indicator of credibility, underpinning the overall integrity of the issue and reinforcing investor confidence. The Indian regulatory framework has long established accountability for both management and auditors with respect to the adequacy and operational effectiveness of internal controls.
A weak control environment can quickly become a material disclosure risk, as inconsistent or unreliable data outputs invite heightened regulatory scrutiny. Over time, such deficiencies can erode investor confidence in the issuer’s ability to manage operations effectively, withstand regulatory examination and adhere to established corporate governance standards.
Unstructured Related Party Transactions (RPTs)
Issuers, both during the listing process and post-listing, are often scrutinized on the legitimacy, rationale and pricing of RPTs. Unstructured or inadequately documented RPTs often create significant disclosure challenges, particularly where transactions may influence key sections of the offer document, including business descriptions, material contracts, approvals and risk factors.
As part of IPO preparedness, issuers should, at least, establish a robust framework for RPTs. This includes formulating a clear policy with defined materiality thresholds, instituting appropriate approval mechanisms through the audit committee and/or shareholders, and maintaining comprehensive supporting documentation to substantiate the legitimacy of transactions and demonstrate arm’s length pricing.
Delays in approvals and licensing
Issuers should ideally initiate approval gap remediation efforts 12–24 months prior to the formal IPO kick-off. Delaying this process can result in documentation gaps that become evident during the diligence phase.
Disclosures in offer documents typically include a summary of valid licenses, permits, approvals, contracts and similar items. SEBI has further strengthened this expectation by requiring the maintenance of a repository of documents relied upon by merchant bankers during due diligence, thereby reinforcing the need for disclosures to be supported by traceable and verifiable evidence.
Aggressive revenue modeling
The most difficult narrative to defend is one built on aggressive growth assumptions such as stretched forecasts, accelerated revenue recognition, or presenting best-case pipelines as near-certain outcomes in financial models. Both regulators and prospective investors tend to treat sudden growth spurts close to filing as a scrutiny trigger and may react unfavorably to any subsequent deviation from the anchor numbers presented.
Throughout the IPO process, issuers should exercise caution to avoid overstating revenue visibility or under-disclosing risks and maintain alignment between the revenue model and the business narrative articulated in the offer document.
To conclude, an IPO is a complex transformation journey that requires more than just strong financial performance. Early preparation, disciplined execution, and alignment across stakeholders are key to success. By proactively identifying and addressing common pitfalls, companies can improve readiness, enhance investor confidence and significantly increase the likelihood of a successful listing.
The article first appeared in Moneycontrol on 3 June 2026.
Summary
Preparing for an IPO requires more than strong financial performance; it demands disciplined planning across governance, controls, and stakeholder alignment. Companies often face challenges such as weak internal processes, inconsistent financial reporting, and underestimating regulatory expectations. By proactively strengthening readiness across these areas, organizations can navigate the IPO journey more smoothly, enhance investor confidence and position themselves for sustained success in the public markets.
How EY can help
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The IPO Knowledge Series offers strategic insights for businesses preparing to go public
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With decades of experience helping companies go public, our IPO readiness assessment team can help you get ready for the big day — and beyond. Learn how.
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