The IPO marketplace has experienced significant fluctuations in activity over the past few years. 2020 & 2021 saw record filing levels for both traditional and SPAC IPOs, only to be followed by a sharp decline in 2022 & 2023, with filings well below normal. The IPO market in 2024 showed signs of life and gained momentum as we moved through the year but still ended with filing levels below historical averages. In 2024, there were 150 IPOs that priced, a 39% increase over the previous year with proceeds rising by more than 50%. While the IPO market was a bit short of a full “comeback”, signs are pointing to a more normalized IPO market in 2025. 

Economic stability and strong results from recent IPOs have brought private companies back to the table in considering a public offering. The pipeline of companies ready but waiting to go public appears larger than ever, signaling pent-up demand. With investor confidence rebounding and capital markets more receptive, 2025 is shaping up to be a promising year for IPOs.

IPO Readiness: Key Considerations

As companies mature, their exposures change rapidly, making it crucial to avoid being caught flat-footed by the nuances of transitioning from a privately held company to a public company–IPO readiness is a topic we frequently discuss with many of our private company clients. In preparing for this transition, they must recognize that an IPO is not just a financing event but a fundamental shift in business operations and risk exposure. Directors and officers, in particular, face heightened scrutiny and potential legal challenges during the critical “IPO Window”—the first three years post-offering. Failing to prepare adequately can expose companies to securities litigation, regulatory oversight, and operational distractions that could have been mitigated with proactive planning.

Businesses must strategically invest in their go-public process to ensure a smooth transition to the public market and avoid the common “IPO, now what?” dilemma. Thorough preparation and readiness are essential for mitigating the risks of costly and distracting securities litigation, which is particularly prevalent during the first three years following an IPO. Companies that successfully navigate this period typically address key IPO readiness factors. Additionally, D&O insurance underwriters closely assess a company's preparedness and capability to execute its business plan post-IPO. A well-defined strategy and genuine readiness can distinguish a company, positively affecting risk assessment and insurance pricing.

Have a Plan & Start Early: Once a company has decided to go public, they need to have a plan and a timeframe in which to execute, with the understanding that a going public transaction can take many forms (traditional IPO, reverse merger, deSpac, Form 10 filing). If a traditional IPO is not an option, what does the alternative look like? How quickly can you pivot, and what is the feasibility of executing the backup plan?

Build a Trusted Team: Recruit the right advisors for your team and the process you are about to undertake. Having knowledgeable business advisors in place and relying on support from auditors and corporate counsel is essential. Bankers, SEC filers, ESG reporting specialists, and Insurance Professionals are all part of this team.

Strengthen Corporate Governance: As an IPO candidate, adopt governance practices that align with current public company standards. To “act like a public company before you go public,” companies must assess whether the appropriate controls, governance, and accounting functions are in place.

1. Senior management teams and the board composition should be fully developed, with all committees in place. Special committees related to specific business risks (such as data security and privacy) should also be formed.

2. An internal review should be undertaken to ensure that all financial statements are in order. Are there any unresolved legacy accounting issues, practices that need changing, or legal disputes that need cleanup?

3. The management team should establish a reporting cadence similar to what the street would expect of a public company. You should have specific metrics established that you will report to the street on a quarterly basis. Make sure relevant disclosures are included in the registration statement and appropriate. 

Assess D&O Coverage: As you transition from the private to the public arena, in addition to your exposures changing, your D&O program will change significantly. Understanding these changes and ensuring the right protection for D’s & O’s is paramount, given the additional scrutiny and regulatory demands of being a publicly traded company. Ensure your current private company D&O program has the correct coverage features to address exposures related to the Pre-IPO process and roadshow. In turn, a thorough diligence process should be run to make sure the go forward public company program has market-leading coverage features and a limit profile that will fully protect the organization and its leaders. The pricing environment remains very favorable given the significant amount of insurance carrier capacity that currently exists. Premiums and retentions are 50% to 100% lower than they were just three to five years ago.

Companies that invest in thorough preparation are best positioned to minimize the risks associated with IPOs. Traditional IPOs can face a securities litigation rate of 20-30% in the three years following pricing, depending on industry and market conditions. Implementing best practices in governance, compliance, and risk management—paired with securing a well-structured D&O insurance program—can significantly mitigate exposure.

Looking Ahead

As the IPO market stabilizes in 2025, companies looking to go public must proactively address the complexities of the transition. By assembling the right team, strengthening governance structures, and securing robust D&O coverage, organizations can position themselves for long-term success in the public markets. A strong risk management strategy isn’t just an added layer of protection—it’s a crucial component of a successful IPO journey. Finding the right broker to guide you through this process can make all the difference, ensuring that your company is well-prepared and properly protected every step of the way.

Considering an IPO? Discover how Newfront's expert team can guide your company through the process. Learn more about our tailored solutions for businesses preparing to go public here.