The initial public offering (IPO) of Saudi Aramco was the largest public offering globally ever as of December 2024. It raised approximately 25.6 billion U.S. dollars. Going public is a big step. It’s exciting, full of potential, and a major milestone for any company. But it’s also full of risks. That’s why pre IPO planning is so very important and necessary.
While many discussions focus on the usual checklist (which are financial audits, regulatory compliance, or even investor relations), the biggest mistakes often come from areas people don’t talk about enough.
And to be honest…these mistakes don’t always come from poor execution.
Sometimes, they stem from how leadership thinks about the IPO process in the first place.
For example, in 2023, one in two U.S. IPOs had negative first-day earnings per share.
So, instead of just listing mistakes, we’re going to break down why they happen and what companies can do differently.
1. Rushing without the pre IPO planning
Unfortunately, many companies often see an IPO as a finish line when in fact it’s just a(nother) starting point. The rush to go public can make leadership focus too much on the short term. Then, they start to push for rapid revenue growth or boost (some key) financial metrics to look good on paper.
This is where problems begin:
- The numbers might look great for a while, but the underlying foundation can be weak.
- Scaling a business to be public-ready is different from running a fast-growing private company. A company that grows too fast without proper internal processes will struggle post-IPO!!
- Unfortunately, private companies can afford to experiment and make mistakes. But…public companies don’t get that same luxury. Investors expect predictable performance. A rushed IPO often means teams are not ready to meet those expectations.
The better approach?
Instead of seeing an IPO as a deadline, companies should think of it as a transition. You need to strengthen the business first. Meaning you need to ensure steady revenue, strong leadership, and a scalable business model. You also have to have a clear post-IPO planning and strategy in place before listing.
2. Weak financial reporting
Public companies face strict regulatory requirements. Many private businesses don’t have the financial discipline or compliance structures needed to meet these standards.
Common mistakes include:
- Poor financial reporting practices.
- Underestimating the need for strong internal controls.
- Not being fully transparent about risks.
Why this is dangerous? Because regulators, investors, and analysts scrutinize every financial statement after an IPO planning. Any discrepancies, hidden liabilities, or accounting errors can and will lead to loss of trust, legal trouble, and even stock price crashes.
The better approach?
Upgrade your financial system and use IPO-grade accounting standards well before going public.
You also need to hire the right experts. A solid CFO, financial advisors, and auditors can help navigate regulations. And above all -be transparent! If there are financial risks, disclose them early rather than facing backlash later.
3. Leadership and/or culture shifts
An IPO doesn’t just change financials but in a way it changes a company’s DNA.
Leadership teams, decision-making processes, and even workplace culture can shift dramatically.
Where things go wrong:
- Many founders struggle with the transition (Running a private company is different from leading a publicly traded one.) Suddenly, there are shareholder expectations, regulatory requirements, and quarterly earnings pressure. Some founders adjust well, others …don’t.
- Also decision-making slows down because of everything above we mentioned. Once public, every major move requires investor confidence, compliance checks, and legal considerations.
- There can be talent retention issues because while IPOs are great for early investors and executives, they can create uncertainty for employees. Some employees leave after their stock vests. Others find the new corporate structure… unappealing.
The better approach?
You simply should plan for these cultural changes early on. Training. Clear communication. Hiring leaders with public company experience can make a big difference.
4. Misjudging market timing
Many companies try to time the market instead of preparing properly. They either go public in a market boom without considering long-term stability.
Or they wait too long and miss the opportunity window entirely. Or they ignore industry-specific factors that could impact stock performance.
Going public at the wrong time can mean:
- Overvaluation during a market peak, leading to sharp drops later.
- Undervaluation if the market turns bearish.
- Investor disinterest if competitors steal the spotlight.
The better approach?
- Look beyond market trends and don’t base IPO timing on hype.
- Study how similar IPOs in your industry have performed so you can understand investor sentiment.
- Above all →Be flexible! If conditions change, be willing to delay the IPO. Don’t force it!
5. Overestimating investor demand
We’ve seen this over and over again. Companies often assume there will be huge investor interest in their IPO planning, but that’s not always the case.
Usually this happens due to:
- Setting unrealistic valuations.
- Assuming a strong private market valuation will translate to public demand.
- Or even neglecting the need for proper investor education.
But if a company prices its IPO too high and demand is weak, the stock may plummet right after listing. Take “Venture Global” for example. Their expected valuation was $122.5 billion, but their actual IPO valuation was 45% below expectations.
When this happens, not only does it damage investor confidence but also makes it harder to raise capital in the future.
The better approach?
- Conduct a proper roadshow. Meet with potential investors and gauge real interest.
- Price realistically because (we don’t know about you but) we’d rather to have a successful, slightly underpriced IPO than a failed, overpriced one.
- Make sure investors really understand the company’s value proposition, risks, and growth potential.
Final thoughts
Many pre-IPO mistakes happen because companies see the process as a financial or regulatory thing that needs to be done rather than what it atually is – a fundamental business transformation.
The key lessons we want you to remember:
- An IPO planning is not an exit; it’s a new phase of growth.
- Leadership and culture must evolve to handle public scrutiny.
- The market matters just as much as company readiness.
- Regulatory challenges require real investment, not just compliance checkboxes.
- Post-IPO success depends on long-term planning, not just a strong debut.
The best way to succeed?
Ensure your business is strong (IPO or not.)tate velit esse cillum dolore eu fugiat nulla pariatur.
Get your financials in order.
Prepare leadership for public scrutiny.