IPO Process
Part two of a three-part series on going public, covering the pros and cons of an IPO, the IPO process, and IPO valuation.
Executive summary
The IPO market remains vibrant in 2025, with the fintech sector drawing significant interest and even a few community banks getting attention. But the decision to go public involves much more than market timing. This year has seen significant activity from fintech companies including Chime, which raised $864 million at an $11.6 billion valuation, and Circle at a $34.5 billion market cap. In June, Northpointe became the first US bank IPO of 2025, valued at $595 million. Stripe, Klarna, and Plaid are all planning offerings.
As an alternative, some companies choose a direct listing, registering shares and listing them on an exchange without issuing new shares or using an investment bank. Direct listings work best where there are many existing shareholders interested in selling and many investors interested in buying. The structure leverages the brand and market presence of the company while avoiding the cost and complexity of a traditional IPO.
In August 2025 USBC went public through a novel SPAC transaction funded with $15 million plus 1,000 bitcoin, worth roughly $110 million at the time. Several other crypto-related companies are using the SPAC structure as well.
The landscape is evolving, and IPOs, direct listings, and SPACs are all viable. The decision must align with strategic goals, growth stage, and market dynamics. Community banks and fintechs may be better served by non-traditional alternatives, particularly given current trends.
The traditional IPO process
The IPO process is typically a four to six month journey, and only if the company already has the financial discipline required to describe its operations from a financial point of view. Many advisors suggest spending a full year before beginning, building the controls necessary to function in the public domain. That pushes the planning horizon to 18 months before the day itself.
The timetable is neatly split in half by the SEC filing date, meaning half the work happens before anyone outside the company and its advisors knows what is going on. The process ends when the deal is priced and closes.
Pre-filing
Most of the important decisions are made before the SEC filing. First and most important, the company must identify its key advisors: investment bank, legal, accounting, and tax. The investment bank assembles a working group list to expedite communication. Together this team answers the structuring questions and sets a target timeline.
Which entity should do the IPO? Sometimes the primary operating company is the best issuer because it is closest to the business and carries little noise to complicate the story. Other times the holding company is better, since existing shareholders probably invested at that level. It is surprisingly common for the best issuer to be an entity that does not exist yet, an assortment of subsidiaries that have not been combined before.
Among banks the answer is almost always the holding company, because issuing there lets the enterprise manage leverage at the bank more easily. It is possible, though rare, to execute an offering for shares of the regulated bank, particularly where there is no holding company.
Primary or secondary shares? With a primary offering the proceeds go to the company; with secondary shares they go to the selling shareholder. A mixture is possible. Primary offerings are often favored because they signal that the company is growing rather than that existing holders think it is a good time to sell.
What is the use of proceeds? Like any equity offering, the deal is first and foremost about raising capital, so the company needs a genuine need for it. That need signals strong growth prospects.
Once structuring questions are resolved, the investment bank seeks approval from its equity commitment committee, then works with the company to assemble a public information book of marketing and financial information, typically uploaded to a virtual data room and shared with the working group. Then drafting begins.
An IPO prospectus is a once-in-a-lifetime opportunity to tell the company's story to the public in a truthful and compelling way. All marketing materials must rely on information disclosed in the prospectus, and roadshow speeches are limited to prospectus disclosures. The company must decide how to portray its operating statistics: whether tables group by product, channel, or region. All operating statistics must reconcile to the financials, and the company must provide audited financial statements for the issuer covering the prospectus period.
Getting the numbers right is hard. Writing the text is harder. It must ring true to both current shareholders and prospective investors. Every executive will read it and employees will hear excerpts, as will suppliers, vendors, and business partners. The prospectus is an opportunity to tell a new story, but the story must remain consistent with what everyone already knows about the firm.
After innumerable drafts the prospectus is ready to file six to eight weeks after drafting sessions begin. The company selects a printer, a transfer agent, and a registrar, and the board formally appoints them, approves the form of stock certificate, and authorizes enough shares to cover the offering. The board should also establish a pricing committee to expedite approval of the offering price.
Financial, operating, and legal due diligence run simultaneously, making these two months among the most difficult and exhilarating in the company's history. Operating diligence typically includes contact with suppliers and customers. Financial diligence culminates in comfort letters from the auditors certifying the numbers in the prospectus.
Post-filing
The SEC allows several weeks to review, comment, and receive responses, typically four to six weeks. IPOs are almost never approved without review.
Look at other public companies to anticipate both SEC and investor comments. For banks, peer selection is relatively easy, since banks are commonly grouped by size and region. For mortgage banks, payments companies, and fintechs the choice is more difficult. The absence of comparables, which often means an absence of accepted valuation methodology, can result in low valuations or excessive volatility.
At minimum, be prepared to discuss overall business strategy; management, including organization chart, experience, compensation, and contracts with key employees; market strategy and competition; product offerings and differentiators; financial diligence including any non-recurring items and all financing and shareholder agreements; financial planning including plan versus actual, projections, critical assumptions, and historical performance indicators; and tax and accounting review.
The roadshow
Preparing the roadshow presentation consumes much of the post-filing period. The investment bank works with the company to write a presentation designed to capture prospective investors, sometimes bringing in a presentation coach. Bankers then walk their equity research team through the story and financials, research teaches the institutional salesforce the selling points, and together they identify the target audience.
The roadshow commences when the SEC is ready to declare the registration statement effective. Presentations run about an hour followed by questions, supplemented by many one-on-one meetings with potential significant investors where the presentation is abbreviated and the discussion extended. Two weeks is usually adequate.
Pricing day
After the roadshow the investment bank prices the offering. Throughout, bankers track expressions of interest from every potential investor, most specifying volume rather than price. As the roadshow concludes they review the book and allocate shares. If the book is strong they can scale back allocations, leaving more after-market demand. After the market closes they review terms with the company and agree a price for the following morning.
When trading commences, the lead controls activity in the stock for up to a week of market stabilization to ensure broad distribution and strong receptivity. They typically exercise the green shoe option, an option to purchase an additional 15 percent of shares at the offering price, which covers the short position created by placing more shares than they agreed to purchase. At the end of a week the deal closes and the bank pays the company the net proceeds.
Alternative routes
SPAC popularity took off when early-stage, high-growth companies realized that traditional IPO disclosure did not give investors enough information. IPO prospectuses generally report historical financial information without projections or discussion of management's plans. Disclosures to shareholders in merger transactions, by contrast, often include how the two companies plan to operate together going forward. If an early-stage company merges with a shell company, its disclosures could include forward-looking statements.
This route around normal SEC disclosure rules was explicitly addressed in 2022, and the differences between IPO and SPAC disclosure were largely eliminated. A merger remains a different transaction from a stock offering, and SPACs often include multiple share classes, warrants, convertible notes, and stand-by investors. For companies that benefit from that financial flexibility, the SPAC route may still make more sense.
Direct listings are gaining traction and require no investment banker. They grew out of the market for trading privately held equities. Private companies often have diverse investors: current and former employees, early-round investors who did not participate later, holders who want liquidity, and holders who want more exposure. As a private company it is difficult to balance all of those desires at once.
Many banks were capitalized decades ago with investments from businesses in the community, and like private-equity-backed companies they may find it impossible to meet the needs of all shareholders simultaneously. Since banks already file call reports and operate in a highly regulated environment, the incremental cost of being public is lower than for most companies.
A direct listing solves much of that by creating a public market, enabling prospective sellers to sell and new investors to buy. As with an IPO the company must write a prospectus, register the shares, and answer the SEC's questions. Unlike an IPO there is no investment bank, no roadshow, and no third party determining the offering price. Instead the price emerges where shareholders are willing to sell and investors willing to buy, with the initial trading price typically set by a dutch auction. Best of all, the underwriting spread is avoided.
Comparing the three routes
Traditional IPO. Raises significant capital for expansion, acquisitions, or balance sheet strength, with underwriter support on pricing and post-listing stabilization. Against that: high cost, with underwriting fees around 7 percent plus millions in other expenses, and lock-up periods typically lasting 180 days that defer liquidity for early investors.
SPAC. Also raises capital, with bankers assisting on pricing the merger, though after announcement the stock price reflects market dynamics. Against that: comparable cost, structural complexity from multiple securities and investor classes that makes the company harder to value, and lock-ups often lasting as long as a year.
Direct listing. Far less expensive, and provides immediate liquidity for existing shareholders without sending a negative signal. Against that: no new capital is raised, making it unsuitable for companies that need growth capital; higher price volatility without underwriter stabilization; and reduced marketing effort, since the absence of a roadshow can mean lower investor awareness, a lower multiple, and weaker trading volume.
When to consider a direct listing
Direct listings suit companies with numerous publicly traded comparables and strong financials on both the balance sheet and cash flow. They also suit companies with diverse shareholders, often those who have gone through several private equity rounds or where enough time has passed that shareholder goals have changed.
They are attractive where shareholder opinion differs on current market value and on whether to incur the cost of an IPO now. A direct listing lets the company offer its shareholders a compromise. Once there is a public price, that price can be used when negotiating mergers or evaluating the dilution of a future offering.
Ongoing obligations
Once listed, companies face continuing requirements: SEC filings including 10-Q, 10-K, and 8-K; Sarbanes-Oxley compliance requiring robust internal controls and audits; investor relations including quarterly earnings calls and annual reports; insider trading disclosures, with trading limited to windows when all material information has been disclosed; and compliance with exchange listing rules.
Summary
Endurance Advisory guides fintechs, payments companies, and community banks through the IPO, SPAC, or direct listing process: conducting gap assessments for public readiness, developing strategy, risk plans, and investor narratives, supporting dual-track IPO and M&A processes, providing regulatory advice and validating recommendations, and assembling teams, preparing timelines, and ensuring due diligence.
The decision depends on capital needs, growth stage, and market environment. IPOs are better suited to capital-hungry community banks, while direct listings offer liquidity for community banks with diverse shareholder groups, or for established fintechs that have been through multiple rounds of private funding.
