IPOs in 2025: Finding the right moment in a rebounding market

The U.S. market for initial public offerings has been on a wild ride over the past five years. The boom in special purpose acquisition companies (SPACs) in 2020 and 2021 pushed hundreds of companies to list in a hurry, often before they were ready. When the frenzy faded, activity collapsed. According to S&P Capital IQ, only 161 companies managed to go public in 2023, a steep drop from the 2021 highs, and many of those struggled once listed.

By 2024 the trend began to shift, with IPO activity nearly doubling after a two-year slowdown. That rebound carried into 2025: Through August, 245 companies had already completed offerings—almost 90% more than during the same period in 2024.

For management teams, this recovery is encouraging, but it comes with conditions. Investors are more selective than ever, prioritizing companies that are profitable—or that have a credible, near-term path to profitability—and that can show clear growth potential. Those arriving with vague strategies or inflated valuations are finding little appetite. However, companies that are properly prepared can find success in the evolving IPO market.

Laying the groundwork

Preparation starts well before a filing. The most successful issuers begin operating like public companies long in advance, building a reliable reporting cadence, maturing information technology teams to focus on compliance and operations, strengthening governance, and refining their ability to explain how they grow both responsibly and sustainably. Investors want more than a vision; they want proof that results can be delivered quarter after quarter.

That discipline begins with an honest self-assessment. Can the finance team close the books quickly and accurately? Do systems capture the metrics that matter most to outside investors? Does the governance structure hold up to public company standards and enhanced audit requirements? Perhaps most critically, is the business model ready for hard questions about profitability and cash flow? Many companies that stumbled during the SPAC wave never asked these questions until it was too late.

IPO readiness: Compliance, the equity story, reporting, governance and human capital

IPO readiness extends well beyond technical compliance. Companies that succeed typically spend a year or more rehearsing what it means to be public before they file. At the core of that readiness is the equity story: a clear explanation of the market, the company’s durable growth drivers and its capital-efficient model, reinforced by a handful of metrics that investors can underwrite with confidence.

Financial reporting must be audit-ready, with transparent segment disclosures and consistent application of non-GAAP (generally accepted accounting principles) measures. Financial planning and analysis should tie operations to the outlook, and management teams should practice quarterly earnings calls in advance. Internal controls under the Sarbanes-Oxley Act (SOX) need to be designed, tested and remediated well before filing. Finance systems should close within five business days and provide leadership and the investor relations team with timely dashboards.

At the same time, companies face heightened demands once the IPO journey begins. Reporting cycles accelerate, with month-end and quarter-end closes compressed significantly. The cadence of quarterly filings means accounting and finance teams must adapt to a new rhythm, often supported by new tools, upgraded processes and tighter cross-department coordination. To manage these demands effectively, companies benefit from leaders with prior public company experience. Without this experience in place, the transition can be far more disruptive and threaten investor confidence.

Governance and human capital are just as important to establishing readiness. The majority of the board’s directors must meet independence standards, and board members must bring the right mix of skills, while compensation structures should emphasize long-term value creation. Tax and legal entities should be streamlined, and net operating losses managed and disclosed appropriately. Risk management and cybersecurity should be integrated into day-to-day operations, with established protocols to respond to incidents in a proactive manner.

Benefits for emerging growth companies

In addition to taking these broader steps, many issuers qualify as emerging growth companies (EGCs) under the Jumpstart Our Business Startups (JOBS) Act of 2012. Electing EGC status can ease a company’s transition to the public markets by reducing initial compliance requirements while still allowing it to tell its story.

Key benefits include scaled financial disclosures with only two years of audited statements, reduced executive compensation detail, exemption from auditor attestation of internal controls under SOX section 404(b), and the ability to adopt new accounting standards on the private-company timeline. This relief can lower the burden of going public effectively and operating as a public company, but investors will still expect discipline and transparency.

Developing an IPO roadmap

IPO readiness is best approached as a roadmap, not a single project. Over 12 to 18 months, companies can evaluate their public company readiness position, remediate gaps, strengthen leadership and rehearse what life as a listed company will feel like—earnings calls, investor updates and quarterly reporting included.

Flexibility and having a strong team matter as well. Many companies pursue dual-track strategies, preparing simultaneously for both an IPO and a private sale, and then selecting the path that delivers the best outcome once markets are clearer. Overall strategy needs to be aligned with management and other stakeholders.

Timing the market

Timing remains the hardest variable to manage, as history shows that windows can open and close quickly. In 2021, companies rushed to the market unprepared, and many paid the price. The slower years of 2022 to 2024 forced investors to become more selective. In 2025, momentum has been building again. IPO numbers are climbing, and offerings in high-demand sectors are drawing attention. Those that are prepared can move quickly when conditions align, while those that wait too long may miss their chance.