How much does it cost to go public?
The process of going public can be costly, in terms of both dollars and time. It requires the attention and heavy involvement of the most senior levels of management, which can distract from normal business operations.
The most significant financial cost is typically associated with the engagement of investment bankers to assist and advise in the transaction, the compensation for which is often a percentage of the proceeds or deal funding. To assist in the process, the company will often also need to engage external advisors in the legal, HR, tax, accounting, and IT fields.
Going public may result in significant one-time or nonrecurring costs for these advisors, all of which may fluctuate due to the size and complexity of both the company and the deal itself. These costs include approximately 6% to 8% of the total deal value for underwriter fees, 1% to 2% for legal fees, 0.5% to 1.5% for accounting fees, and an additional 0.5% to 1.5% for other fees (printing, SEC registration, etc.). In addition, management will need to consider increases in recurring costs that may result from higher compliance costs, both internally (e.g., for internal audits) and externally (e.g., for Public Company Accounting Oversight Board audits), additional legal fees, directors, and officers insurance, and more.