Mastering the Path to a Successful IPO

Going public marks a significant transformation, opening the door to greater visibility and access to capital that can fuel long-term growth. While the rewards are significant, there are new challenges, including greater scrutiny from investors, customers, competitors and regulators.

With careful preparation and a clear IPO strategy, companies can successfully navigate these demands and unlock the full potential of the public markets, turning risks into opportunities for lasting success.

West Park Advisory (WPA) has deep expertise in helping companies navigate this journey and in this article, we discuss four foundational pillars for a successful IPO.

1. Present a Clear and Compelling Investment Thesis

Marketing to public investors is fundamentally different from selling a product. They are a specialized audience, speaking their own unique language and digesting information in a very specific fashion. Many management teams rely on a strong product story to sell their stock, but investors require more: an investment thesis.

An investment thesis is a compelling argument, grounded in tangible data and key performance indicators (KPIs) to help investors appreciate what makes the business and its equity attractive.

Selecting the right KPIs is crucial for communicating your company’s value and this selection process demands thoughtful analysis. You must focus on metrics that genuinely capture the underlying drivers of your business’s performance, but these metrics must also balance transparency with strategic caution — revealing sensitive data can give competitors an edge.

The objective is to distill your operations down to their most vital measures and communicate these indicators clearly and confidently to stakeholders. Importantly, KPIs should remain stable over time to reinforce trust; if any changes are necessary, they must be accompanied by clear, well-reasoned explanations to preserve credibility.

Private companies rightly pride themselves on agility, rapidly shifting their strategy to seize new opportunities. But public market investors seek disciplined execution and clearly defined goals, and they value sustainable competitive advantages. Frequently changing priorities undermines credibility, with the result that investors may question the investment opportunity and raise concerns about a lack of focus. Investor trust is earned by highlighting tangible accomplishments while demonstrating consistent progress against meaningful KPIs and strategic goals that have been presented in your investment thesis.

2. Allow Enough Time for Your Investment Thesis to Gain Credibility in the Market

Make sure you bake in enough time prior to your IPO to show progress in achieving your strategic goals. Investors want to see real traction in the year before you file confidentially for an IPO, and you need to be visible in the market.

Consider creating a platform for your key technology spokesperson, host an investor education forum with your engineering leadership team, and seek out keynotes for your CEO and CTO at important industry and financial conferences. Make sure that your spokespeople are trained to interact with public investors in a pre-IPO setting, and make sure they are engaging the right decision-makers at key investment funds, consistently delivering the key tenets of your investment thesis.

3. Consider a Crossover Round to Build Trust and Momentum

With the right investment thesis and a highly credible leadership team, you can attract world-class capital before your public offering and build significant interest. These investors can be very motivated to double down during the IPO and build a meaningful position in your stock. A quality list of crossover investors will attract additional public investors, as the stamp of approval from a high-profile asset manager can be a tremendous benefit by endorsing the management team and the attractiveness of the investment thesis.

In choosing a banker to facilitate your crossover, make sure the team you select has the relationships and expertise necessary to attract the highest quality investors. (The WPA team are not bankers, but we can help you in the selection process)

Lastly, keep in mind when preparing to market your crossover round that it is critical to have your longer-term investment thesis fully baked so that investors can buy into your industry vision early and track your progress over time. Investors reward consistency and execution.

4. Focus on World-Class Operations, in Finance and Beyond

All companies preparing for their IPO know that the Finance team needs to be fully prepared for life as a public company. That means a strong quarterly close process is in place and multiple mock earnings releases have been completed by the IPO. It also means that your beat-and-raise model (blessed by the board, sales and engineering leadership) has been in place and stress-tested well prior to the IPO.

Outside of Finance, it’s crucial to partner with your Marketing and Communications teams to ensure consistent and complementary corporate messaging that aligns with the investment thesis. A strong partnership with Sales will consistently surface meaningful customer wins for earnings announcements and investor days. And full alignment with Engineering is necessary to accurately highlight technology differentiation as well as important partnerships and industry vision. This type of internal leadership and teamwork is essential for building trust with investors.

Navigating the Journey

In our past roles, the WPA team have sat in almost every seat during an IPO — from the IRO and internal operations manager during the process, as a banker shepherding the transaction, as an IR and communication advisor helping build structure and messaging, and finally as analysts and portfolio managers attending testing the waters and roadshow meetings to decide whether or not to participate in the offering. This unique, multi-faceted experience provides WPA with a deep set of skills to guide your C-Suite through the IPO process and just as importantly, prepare you for life as a newly public company.