January 18, 2019
By Mike Gould, PwC Deals Partner
The process of becoming a public company can be both lengthy and costly, but the potential rewards make it a worthwhile pursuit for many organizations. It’s important to know what you’re getting into and to plan appropriately for all aspects of the IPO process.
Costs: what to expect
The costs associated with the execution of the IPO process include underwriting, legal, accounting, printing, SEC registration fee and market listing fees. By far, underwriting costs make up the largest component of the direct costs of going public. Based on the public registration statements of 315 companies, on average, companies incur an underwriter fee equal to 4-7% of gross proceeds, plus an additional offering costs of $3-5 million directly attributable to the IPO. In addition, there are other one time costs relating to the IPO and for preparing the company to operate as a public company, which typically exceed another $1 million, and on-going annual incremental costs to hire additional employees and implement new systems etc., which frequently exceed another $2 million annually.
IPO Cost Tool: Estimated costs for your company
We’ve created a tool to help you get a better idea of how much it could cost your company to go public. With our IPO Cost Tool, you simply enter some basic information about your company and the tool will give you indicative costs for your IPO. Having a realistic expectation of the costs can help improve the budgeting process, limit surprises, and reflect a well-structured IPO timeline.
To get more in-depth information about the costs associated with going and being public, check our Costs of an IPO publication, or reach out to Mike Gould. And in the meantime, use our IPO Cost Tool to get some insight based on historical data and experience about how much it could cost your company to complete the IPO journey.