IPO Process – Underwriting, Forecasts, And The Road To Launch

While you are grinding away on the S‑1, there are many other work streams running in parallel. One of the most important—and least talked about—is getting through the underwriting process. The S‑1 gets you most of the way there, but it is not enough on its own. You also need to provide the banks’ analysts with a detailed financial forecast.

This is very different from life once you are public. Under Regulation FD, you do not share your detailed internal forecast with sell‑side analysts unless, for some very unusual reason, you have already made it public. During the IPO process, however, you are still a private company, and those public‑company disclosure rules do not yet apply.

This forecast matters a lot, and it needs to be carefully balanced. There is always a temptation to push the numbers—stretch the growth assumptions and aim for a higher valuation at the IPO. In my experience, the less public‑company experience a leadership team has, the stronger that temptation tends to be. That is a meaningful mistake, and it can have consequences in several different ways.

The first is credibility with the sell‑side analyst. This is someone you are likely to have a relationship with for years. The more aggressive your forecast, the more questions you will get. Analysts are very experienced at talking to management teams, and they are good at figuring out when numbers lack a solid foundation. Even if you can technically defend the assumptions, they will still wonder why you are pushing so hard. These analysts work closely with potential investors and will be fielding questions about expectations. You want them transmitting confidence, not concern.

The second issue is the pressure you put on yourself to hit your first few quarters as a public company. The IPO process feels like a sprint, but being public and creating long‑term value is much closer to a cross‑country run than a 50‑yard dash. Missing your first quarter right out of the gate can be catastrophic for credibility. It is very hard to reset expectations once you stumble early.

The third consideration is internal to the banks themselves. Your banking team has to take the deal in front of their internal committees to get approval and a green light to proceed. Everyone in that room has seen dozens—if not hundreds—of IPOs. Their job is to control risk. A management team that appears overly promotional or willing to stretch the truth to grab incremental valuation is a risk factor.

This does not mean you should sandbag the numbers. It means you should make sure you do not need perfect execution and a lot of luck to hit the first few quarters. If you need another practical reason to stay disciplined, remember that you are going to be locked up for at least six months after the IPO. There is no immediate personal benefit to being overly aggressive right out of the gate.

This forecasting exercise also feeds directly into the final negotiation around the expected IPO price. It sounds great to see the stock skyrocket the moment trading begins, but that simply means you left money on the table. A healthy first‑day pop sets a positive tone. An excessive one is just capital you failed to raise. You might recapture some of it later through a secondary offering, but it is far better to price the initial deal thoughtfully.

At the same time, you are also building the roadshow presentation. In the successful IPO I was part of, this was heavily driven by our founder and CEO. He had previously gone through an unsuccessful roadshow, but the business had changed dramatically by the time of this one. Building the presentation inevitably involves bouncing back and forth with the business section of the S‑1 to ensure that every claim and message is properly reflected in the prospectus.

I was fortunate that our founder drove this process. He had deep institutional knowledge of the company and a clear sense of what mattered. Roadshow presentations are strange things. Sometimes they are the focal point of investor meetings. Other times they barely get looked at, and the conversation turns immediately into Q&A.

You will also use this presentation to record the virtual roadshow, so it will be seen by a large number of potential investors. I generally recommend including a few “halo” slides that act as launching pads for key investment themes. Not everyone naturally finds their rhythm in an investor meeting, and a well‑structured presentation can help create momentum. Our CEO did not really need it, but for many teams it can be valuable support.

I am always amazed by how much time gets spent on presentations. This one is more important than most, but it is still a massive time sink. There are so many cooks in the kitchen that the final version is often worse than an earlier draft. In addition to the usual internal stakeholders, your lawyers and the banks’ lawyers will give it an extremely thorough scrub. Eventually, it does get done, and you inch closer to launch.

Usually the last major hurdle—assuming the market is open—is final approval from the SEC. I have written previously about responding to SEC comment letters, and the process is not fundamentally different here:

Responding to a comment letter from the SEC

The stakes are higher and the time pressure is intense, but the mechanics are the same. The key difference is that you generally do not have the option of saying, “We will improve this in the next filing,” even for relatively minor disclosure issues. The SEC will want it fixed now.

You need to move quickly as you approach your intended launch window, but it is worth remembering that the SEC does not want to stop you from going public. Their job is to make sure you are following the rules. You may not even receive a detailed review—or any review at all. If you planned properly and staffed the process correctly, this stage should be manageable. If the SEC uncovers multiple accounting or disclosure issues, however, the process will stall, and it will be obvious to everyone why.

Once you clear this final step and your banks confirm that the market window is open, you instruct your lawyers to notify the SEC that the S‑1 is effective. At that point, you actually launch. My next post will cover what happens once the process moves fully into the roadshow and selling phase.