4 things IPO aspirants should do now

Company leaders can prepare to navigate the public markets confidently when the IPO market returns.

US IPO activity in 2022 was the slowest in more than a decade. What should company leaders do as they wait for the market to rebound? Two CFOs from technology companies that recently went public — Qualtrics (by IPO) and Amplitude (by direct listing) — offered several lessons learned.

1. Treat going public as a milestone, not a destination

“While going public can be a mega event, it’s not the end of the road. It’s a great tool to [transform your stock into a] currency … you can use to fund future M&A. [And it can be a huge catalyst] for marketing the organization,” says Rob Bachman, CFO of Qualtrics. Companies go public for many different reasons, but it is critical to remember that achieving a public listing is only a small part of the journey; positioning your organization to realize the benefits of a listing, while minimizing costs and disruption, will be critical to achieving those goals.

2. Set realistic expectations for how you’ll need to act as a public company

The stakes can be higher after you go public. One mistake many companies make is underestimating the amount of time you need to spend interacting with external stakeholders, which necessarily diverts attention from running the business. “It’s a tremendous change to report results every 90 days,” says Hoang Vuong, CFO of Amplitude. “And as much as your team might prepare for mock earnings calls, they are no substitute for analysts digging into the numbers and asking about things you don’t want to talk about.”

3. Make going public part of your talent strategy

Companies can benefit from hiring experienced professionals who have navigated an IPO or worked in a public company before. These professionals can bring the perspective and rigor necessary to get a company IPO-ready. For example, the CFO of a public company spends a great deal of time meeting with investors and analysts, so it’s essential to build a strong finance team — from planning and forecasting to tax and accounting — that strengthens the organization’s ability to predict as well as reliably report actual results. Seek talented and ambitious finance professionals who have public company experience to bolster your team and help develop the discipline required of a public company.

4. Focus on profitable growth and strengthening balance sheets

IPO windows are unpredictable, so ensuring adequate funding for the business is paramount. Continue to focus on developing the infrastructure and capacity to support the company’s growth, as well as developing the predictability of the business and the effectiveness of the company’s model. Predictable results are one of the key factors to establishing investor confidence and leading to success as a public company.