These are the questions CFOs, CEOs, and founders most frequently ask at the start of the IPO process. Each answer is concise — click through to the full guides for complete coverage.
The IPO Process
Q: How long does it take to go public?
A: 12–18 months for a well-prepared company. The longest workstreams are the PCAOB audit (requires 2 full fiscal year audits before filing) and the SOX readiness program. Companies that start preparing 18 months before the target IPO date are in the best position. See: IPO Timeline →
Q: How much does an IPO cost?
A: The underwriting spread (5–7% of proceeds) is the largest single cost. Total transaction costs including legal, audit, printing, and D&O typically add $5–15M on top of the spread. Ongoing annual public company costs run $4–20M/year. See: IPO Costs →
Q: What is an EGC and do we qualify?
A: An Emerging Growth Company is a company with less than $1.235B in annual revenue that has not previously completed a registered IPO. Most IPO companies qualify. EGC status provides five significant accommodations including confidential S-1 submission, 2 years of audited financials (vs. 3), and testing-the-waters meetings. See: What Is an EGC? →
Q: Do we need a Big Four auditor?
A: Not necessarily. For IPOs below ~$2B market cap, national PCAOB-registered firms (Grant Thornton, BDO, RSM) are generally acceptable to institutional investors and underwriters. For larger deals, Big Four is typically expected. Some underwriters will push back on national firm auditors for larger transactions. See: Selecting an Auditor →
Q: What is the S-1 and how long does it take to draft?
A: The S-1 registration statement is the public disclosure document filed with the SEC to register the IPO shares. Drafting typically takes 4–6 months. The SEC reviews the S-1 and issues comments; the total time from initial filing to effectiveness is typically 3–5 months. See: S-1 Section by Section →
Accounting Questions
Q: What is ASC 606 and do we need to adopt it before the IPO?
A: ASC 606 is the revenue recognition standard that governs how companies recognize revenue from customer contracts. It has been required for public companies since 2018 and for private companies since 2019. Your S-1 financial statements must comply with ASC 606. If your company hasn't fully implemented it, this is an urgent accounting advisory workstream. See: ASC 606 Guide →
Q: What is a 409A valuation and why does it matter at the IPO?
A: A 409A valuation is the independent appraisal of your common stock FMV required by IRC Section 409A before you can grant stock options. At the IPO, the SEC compares all option grant prices in the prior 12–18 months to the IPO price. If options were issued at prices substantially below the IPO price, the SEC may require additional stock-based compensation expense recognition (the "cheap stock" problem). See: 409A Valuations →
Q: What happens to outstanding SAFE notes at the IPO?
A: SAFEs convert to common stock immediately before or at IPO closing. They must be reflected in the fully-diluted share count in the S-1 capitalization table. The accounting classification of SAFEs (typically mezzanine equity) and the conversion mechanics require careful analysis under ASC 480. See: SAFE Notes at IPO →
Q: What is SOX 404 and when does it apply to us?
A: SOX Section 404 requires public companies to assess internal controls over financial reporting. Newly public companies generally get a grace period — 404(a) management assessment applies starting with the second 10-K. EGCs are permanently exempt from the auditor attestation (404(b)). See: SOX 404 Guide →
Q: Do we need a separate accounting advisory firm in addition to the auditor?
A: For most companies, yes. SEC auditor independence rules prohibit the PCAOB auditor from advising on how to prepare the financial statements — they can only audit them. Revenue recognition implementation, SOX control design, close process improvement, and non-GAAP policy design require a separate accounting advisory firm. See: Selecting Accounting Advisory →
Capital Structure
Q: What happens to our preferred stock at the IPO?
A: All preferred stock automatically converts to common stock at the IPO, triggered by the "qualified IPO" provisions in your certificate of incorporation. The conversion ratio depends on any anti-dilution adjustments from historical down rounds. See: Preferred Stock Conversion →
Q: We have outstanding convertible notes — what happens to them?
A: Convertible notes convert to preferred or common stock at the IPO (depending on the note terms). The accounting treatment under ASC 470-20 and ASU 2020-06 determines how they appear in the S-1 financial statements. See: Convertible Notes at IPO →
Q: Can we pay off our venture debt from IPO proceeds?
A: Yes — many companies repay outstanding venture debt from IPO proceeds. This must be disclosed in the S-1 use-of-proceeds section with details about the facility, outstanding amount, and the lender. See: Venture Debt at IPO →
Lock-Up and Trading
Q: What is the lock-up period and who is subject to it?
A: The standard lock-up period is 180 days from the IPO effective date. It applies to officers, directors, shareholders owning 5%+ of any class, and typically all employees. It is a contractual restriction, not an SEC requirement. See: IPO Lock-Up →
Q: When can executives start selling shares after the IPO?
A: After the lock-up expires (typically Day 181) and outside of blackout periods, executives can sell pursuant to a 10b5-1 plan. Officers and directors must wait 90 days after setting up the plan before the first trade — so they should set up their plans well before the lock-up expires. See: 10b5-1 Plans →
Q: What happens if our stock drops below the IPO price?
A: The underwriters may use the greenshoe (overallotment) option to purchase shares in the open market during the 30-day stabilization period, which supports the stock price. After 30 days, the stabilization window closes. See: The Greenshoe Option →
Investors and IR
Q: How is the IPO price set?
A: The price is set on "pricing night" — the evening after the last day of the roadshow. The lead underwriter reviews the order book with management and recommends a price based on book quality, oversubscription level, and market conditions. See: IPO Pricing Night →
Q: What is Regulation FD and how does it apply after the IPO?
A: Regulation FD prohibits selective disclosure of material non-public information to securities market professionals. Every investor call, conference presentation, and management communication is subject to Reg FD from Day 1 of trading. See: Regulation FD Guide →
Q: What is the analyst quiet period after the IPO?
A: FINRA rules prevent underwriting firm analysts from publishing research for 25 days after the IPO effective date. Non-underwriter analysts can publish immediately. After Day 25, initiating coverage reports from the underwriting banks are typically published. See: Post-IPO Analyst Quiet Period →
NYSE vs. Nasdaq
Q: Should we list on NYSE or Nasdaq?
A: Both are liquid and credible. The decision typically comes down to sector norms (most tech companies list on Nasdaq; most financial and industrial companies list on NYSE), listing fees (Nasdaq is generally lower), and which exchange's relationship team provides better service. See: NYSE vs. Nasdaq →
Q: What are the listing standards?
A: Both exchanges have financial and governance listing standards. NYSE requires $40M in stockholders' equity (one path) and a $100M minimum market cap. Nasdaq Global Select Market requires $110M stockholders' equity and comparable market cap. Both require a majority-independent board and audit committee. See: Listing Standards →
Advisors
Q: What advisors do we need to hire for the IPO?
A: Eight to ten advisor roles are typically needed: IPO counsel, PCAOB auditor, accounting advisory firm, investment banks (underwriters), D&O insurance broker, investor relations firm, transfer agent, financial printer, compensation consultant, and possibly a VDR provider. See: Building Your IPO Team →
Q: When should we start the IPO process?
A: Engage the PCAOB auditor and accounting advisory firm 18+ months before the target S-1 filing. Engage IPO counsel 12 months before. Run the underwriter bake-off 6 months before. Engage D&O broker and IR firm 9 months before. See: IPO Timeline →
Q: What is the accounting advisory firm and why do we need one?
A: The accounting advisory firm advises on how to prepare the financial statements — ASC 606 implementation, SOX control design, close process improvement, non-GAAP policy. The PCAOB auditor can only audit completed statements; it cannot help prepare them (independence rules prohibit it). See: Selecting Accounting Advisory →
Start With the IPO Readiness Assessment
The IPO readiness framework covers all six preparation workstreams — a structured starting point for any company beginning the process.