Larry Westall, PwC Partner
In Q2’16, we saw a slight uptick in Austin’s venture capital funding as compared to Q1’16. Nationally, the number of venture-backed IPOs rebounded in Q2’16 with twelve, including nine biotechs. This positive momentum has CFOs thinking hard about the chance to approach the capital markets in the coming months.
Even though the intention of the JOBS Act was to make accessing the capital markets more cost-effective, an IPO still has significant costs. Companies frequently underestimate these costs, as well as the time and intricacy involved in the offering. The IPO process complexity can vary widely based on a number of factors, such as the complexity of the IPO structure, the size of the company and dollar value of the offering, and a company’s readiness to operate in a public environment.
Factors that impact the cost of an IPO include both the costs of going public and being public:
- Direct costs of going public include costs such as underwriter, external auditor, legal, and financial reporting advisor fees
- Long-term costs of being public include costs such as the need to develop external reporting and supporting internal controls, investor relations, and human resource functions
Regardless of the individual nuances that mark a private company’s transformation into a public company, all IPOs share a common thread: a substantial investment of time, money, and resources.
I invite you to attend PwC’s upcoming IPO Readiness Seminar on Wednesday, September 28th at the Capital Factory. We are bringing an impressive local speaker lineup representing CFOs of recently public companies, legal advisors, and NASDAQ - all talking about best practices through the readiness process of IPOs and other large financial transactions. Learn more and register to attend.
Interested in PwC’s most recent data and perspective on the IPO market? Check out our in depth report called Global Technology IPO Review.