Financial Checklist: All the Costs to Prepare for Before Going Public
Preparing for an IPO requires a precise financial checklist. You need to anticipate both upfront and recurring costs to avoid draining your capital. This guide details each expense category, shows how they affect your net proceeds, and explains how to budget effectively for life as a public company.
What are the major upfront fees when going public?
Your biggest line item will almost always be underwriting fees. Banks typically charge 4%–7% of gross proceeds. In a $200 million raise, you can expect $8–14 million to go straight to underwriters.
Legal and accounting costs run close behind. You’ll need external counsel to draft your registration statement, review disclosures, and manage regulatory filings. Accounting firms must complete multiple audit cycles and issue comfort letters. These fees often range from $1 million to $4 million.
On top of that, you’ll face filing and listing fees. Exchanges charge significant sums to list, and regulators require application fees. Printing prospectuses, paying transfer agents, and preparing investor materials can add hundreds of thousands.
How much can total IPO preparation cost?
For most mid-market IPOs, the total direct costs are between $3 million and $5 million. For larger companies, the range can exceed $10 million.
These figures exclude indirect costs like management time and operational delays. Your leadership team, particularly the CEO, CFO, and general counsel, will dedicate as much as 25–50% of their time during the last six months to IPO-related tasks. That’s a hidden but real cost.
If you account for both direct and indirect expenses, you’ll see why budgeting conservatively is critical. Many companies underestimate the cash burn required to reach the public markets.
What ongoing costs should you expect after going public?
The expense structure doesn’t end once you ring the bell. Recurring costs can easily reach $500,000 to $1 million annually for small and mid-cap firms, and several million for larger companies.
Quarterly and annual filings require expanded audit services. Investor relations staff and external communications firms become ongoing line items. You’ll also need to maintain a robust internal controls environment, which means additional finance staff, upgraded IT systems, and compliance oversight.
Insurance is another critical expense. Directors and officers (D&O) liability coverage increases sharply post-IPO, often costing several hundred thousand dollars annually.
What is the difference between IPO and direct listing costs?
If you choose a direct listing, you can eliminate underwriting fees altogether. This immediately saves 30%–50% compared to a traditional IPO.
But keep in mind: legal, accounting, filing, and investor relations costs remain the same. In some cases, they may even increase, as you’ll need stronger investor communication without a syndicate of banks doing book-building.
Direct listings favor companies with strong brands and built-in investor demand. If you fall into that category, you’ll reduce cost dramatically. If not, underwriting may still be the safer path.
How do marketing and investor relations costs impact the budget?
The IPO roadshow requires significant spend. Investor presentations, public relations campaigns, and analyst briefings are essential to build demand. Marketing budgets often range from $100,000 to $500,000.
You’ll also need to fund ongoing investor relations. That means setting up an internal IR team or retaining an external firm. Investor communications, annual shareholder meetings, and analyst days add to the recurring costs.
Failing to budget for IR leaves you exposed. A weak investor relations program can lead to misaligned expectations and volatile trading performance post-IPO.
What hidden costs are often overlooked?
Companies often underestimate the infrastructure required to be public. You’ll need upgraded IT systems for reporting, cybersecurity measures for shareholder data, and expanded finance staff to manage compliance.
Management time is another overlooked cost. Executives often lose half of their operational focus during IPO preparation. Without a strong bench, business performance can slip at the worst time.
Finally, lock-up expirations can trigger volatility and add indirect costs. Communicating with investors about insider selling plans requires extra IR effort and sometimes financial maneuvering, like share buybacks.
How should you structure your IPO budget effectively?
Break costs into clear categories so you can forecast and control them.
- Underwriting fees: 4%–7% of gross proceeds
- Legal and accounting: $1M–$4M
- Regulatory filings and listing fees: $200K–$500K
- Investor relations and marketing: $100K–$500K
- IT, systems, and compliance upgrades: $300K–$1M
- D&O insurance premiums: $300K–$1M+ annually
- Recurring compliance and IR: $500K–$1M+ annually
By treating your IPO like a multi-year investment rather than a one-time event, you’ll preserve capital and set expectations for your board and investors.
What Costs Should You Budget for Before Going Public?
- Underwriting (4%–7% of proceeds)
- Legal and accounting ($1M–$4M)
- Filing and listing ($200K–$500K)
- Investor relations and marketing ($100K–$500K)
- Insurance and compliance ($300K–$1M+)
In Conclusion
Going public demands a disciplined financial checklist. You must budget for underwriting, legal, accounting, compliance, investor relations, and insurance—plus recurring annual costs. By preparing for both the upfront and ongoing expenses, you’ll protect your IPO proceeds, maintain investor confidence, and establish long-term financial strength as a public company.
Want deeper insights on IPO preparation and financial strategy? Check out Glen Leibowitz’s LinkedIn for expert perspectives.
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