When to IPO?
You need more than just “right timing” for a successful IPO.
The run-up to an IPO, to put it mildly, can be demanding. Besides starting early, what else can SaaS companies do?
From IPO readiness to the iconic bell-ringing ceremony and beyond, we discuss how SaaS companies can set themselves up for the long haul.
CFO Ray Ratan joined us for this webinar to share the critical elements that SaaS companies need to have in place when preparing for an IPO.
Ray shared three non-negotiable IPO fundamentals for a SaaS company; he pointed out that:
“Every SaaS founder that's starting off a company, whether it's initial inception to being mid-stage, really is marching toward three fundamental things: quality financial performance, good levels of liquidity, and corporate governance.”
In addition to giving a breakdown of the rigorous steps involved in IPO preparation, Ray also talks about:
- The need to showcase strong financial growth with metrics like ARR, revenue growth, and gross margins
- The significance of ‘market timing’
- Meeting investor expectations
We also cover what you can expect once you go public and how to stay in step with ongoing regulatory compliance.
Speakers
Ray Ratan, Investor/Advisor to multiple companies
- A seasoned CFO with over two decades of experience
- Previously worked with Hour Loop, Inc., and Commerce Global Holdings
Hosted by:
Saurabh Agrawal, Cofounder and CPTO at Zenskar
Webinar Summary
Q. Who is the guest speaker in the podcast?
Ray is based in the San Francisco Bay Area and has worked with a range of tech companies in SaaS and adjacent industries, including healthcare, AI/ML, fintech, ERP, and business intelligence. He has experience with early-stage startups, hypergrowth firms, M&A-driven companies, and those preparing to go public.
Q. What kind of companies has Ray worked with?
Ray has supported both small and large tech firms across multiple verticals, guiding them from early investments through Series A–D funding rounds, M&A expansions, and IPO preparation.
Q. What are the key factors for a company to go public?
Companies should focus on three pillars:
- Financial performance (e.g., ARR growth and gross margins)
- Liquidity to sustain operations
- Corporate governance to ensure transparency and accurate financials
Q. Why would a company choose to go public instead of staying private?
Going public enables:
- Access to more capital
- Enhanced credibility with stakeholders
- Equity and debt funding via public markets
- Liquidity for founders and early investors
Q. Can a private company achieve the same benefits as going public?
While private companies can raise capital through investors or secondaries, public companies generally gain higher valuation potential, better market credibility, and greater independence from investor constraints.
Q. What are the key challenges companies face when preparing for an IPO?
Common challenges include:
- Hitting performance benchmarks
- Upgrading accounting/reporting systems
- Managing regulatory filings and audits
- Building a scalable operational and legal structure
Q. How long does it take for a company to go public?
Typically about two years:
- Year 1 for internal preparation
- Year 2 for listing execution and regulatory clearance
Q. What steps should a company take when preparing for an IPO?
Steps include:
- Ensuring product-market fit
- Tracking SaaS metrics like ARR, CAC, and gross margins
- Building a strong team and governance
- Refining operational efficiency and preparing an S-1 filing
Q. How does the quality of financial reporting impact the IPO process?
High-quality, transparent reporting is critical. It fosters trust with auditors, regulators, and investors, and requires robust internal controls and audit-ready practices.
Q. What role does market condition play in going public?
Favorable market conditions—high investor confidence, strong public valuations—can significantly boost IPO success. Timing the IPO alongside market optimism is strategic.
Q. How do companies handle audit and legal processes during an IPO?
Companies must:
- Work with external auditors to validate financials under GAAP
- Partner with legal advisors to handle SEC filings and compliance
- Prepare detailed S-1 disclosures, including risks and financial projections
Q. What operational and organizational changes should companies expect before going public?
Companies must:
- Tighten billing, collections, and cash flow processes
- Establish internal controls
- Ensure their systems and operations can scale post-IPO
Q. How does the size of the finance team impact a company’s IPO process?
The finance team should be around 3–4% of total headcount. A lean, efficient team supported by strong systems is better than a large team reliant on manual processes.
Q. How important is having the right tooling and systems in place before an IPO?
Extremely important. Without the right financial infrastructure, companies risk failing audits or delaying IPOs due to a lack of transparency and scalability.
Q. What challenges can companies face without the right financial systems before an IPO?
Risks include:
- Failing to reconcile financial records
- Inability to validate receivables or payables
- Delays in audit readiness
- Regulatory non-compliance
Q. What changes occur post-IPO in terms of company operations?
Public companies must:
- File quarterly earnings reports
- Disclose major internal changes (e.g., executive departures)
- Meet investor expectations and comply with ongoing regulatory requirements
Q. What kind of operational inefficiencies can affect a company’s IPO process?
Inefficiencies such as manual billing, unclear cash management, or weak internal controls can delay audits, hurt investor confidence, and derail IPO plans.
Q. How should a company manage investor expectations after going public?
Post-IPO, companies must:
- Communicate performance clearly and regularly
- Offer realistic forecasts and deliver on them
- Build trust through consistency and transparency
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