Guide to understanding Initial Public Offering process for mature businesses

In 2024, just 18 companies went public on the London Stock Exchange, the lowest number on record, but those listings still raised £193.1 million.¹ It shows how significant an IPO can be, even when few happen.

Going public changes how a business operates. It opens doors to new investors and funding, but it also means more rules and more reporting. If you’re considering this step, it's essential to understand how the process works and what it demands.

And if you already work with investors or partners abroad, managing money across borders becomes even more important after listing. That’s where Wise Business helps, with a simpler way to handle global payments and keep control of your costs.

💡 Learn more about Wise Business

What is an IPO? (IPO meaning explained)

An Initial Public Offering, or IPO, is when a private company sells its shares to the public for the first time. It’s how a business transitions from private ownership to being listed on the stock market.

In the UK, that usually means the London Stock Exchange. Smaller companies sometimes list on AIM instead, which has fewer requirements and costs less.² Either way, the company publishes a prospectus first. This runs to hundreds of pages covering what the business does, its financial history, who manages it, and what risks exist. The Financial Conduct Authority (FCA) has to approve it before shares can be sold.³

IPO meaning comes down to this: it turns private ownership into public stock. Shares that couldn't be sold before become tradeable. Founders and early backers can cash out if they want. The company gets access to far more capital than it could raise privately.

But there's a trade off. Public companies report results every 6 months and shareholders can challenge decisions.⁴ Also, analysts and journalists watch closely and there’s no privacy. Some companies can accept that tradeoff because they want to grow faster but others might decide it's not worth the scrutiny.

Traditional IPOs, Direct Listings and SPACs

There are three ways to list, each involves different costs and different amounts of control.

A traditional IPO brings in investment banks to price shares and find institutional buyers. The banks handle most of the work, which takes months and costs a lot, but they also steady the price and bring credibility. Deliveroo raised £1.5 billion this way in 2021. Shares fell 30% on day one, but the company had already locked in its funding before trading started.⁵

A direct listing skips the banks and existing shares go straight to market. No new shares get created, so no new money comes in. The price swings more because there's no bank managing demand.

A Special Purpose Acquisition Company (SPAC) raises money first, lists as an empty shell, then hunts for a private business to buy. Once the deal closes, the private company becomes public without a traditional IPO process.

SPACs took off in the US during 2020 and 2021,⁶ but the UK was more cautious. Until 2021, any SPAC on the London Stock Exchange would get suspended from trading once it announced an acquisition target. That made them impractical.

The FCA changed the rules in 2021 to allow SPACs that meet stricter investor protections. Now SPACs can avoid suspension if they give shareholders a redemption option to exit before any deal completes, ring-fence the money raised, get shareholder approval for acquisitions, and operate within a two to three year time limit. SPACs also need to raise at least £100 million at listing.⁷

Which route works depends on whether you need capital, how much price volatility you can accept, and whether you want speed or structure.

Why companies go public

Going public usually means a company has grown up. It’s found its footing, proved its business model, and now wants a bigger stage. But listing shares on the stock market is one way to get there. Let’s talk about some reasons companies go public.

Raising money to grow

The main reason is funding. Selling shares brings in cash that can be used for expansion, paying off debt, or buying other companies. Remember the Deliveroo example? It was listed in London in 2021 and raised around £1.5 billion.⁵ The move helped it invest in its app and expand across Europe.

Giving early investors a way out

Founders, staff, and early investors often hold shares that aren’t easy to sell while the company is private. Going public changes that. It gives them a market for their shares and a chance to turn long-held stakes into cash. Many firms also use this moment to launch new share schemes for employees.

Building credibility

A stock market listing signals stability. It shows the company is ready to open its books and meet the reporting rules that come with public life. For suppliers and customers, that kind of transparency often builds confidence.

Using shares as currency

Public shares can be traded, gifted, or used in deals. Companies sometimes offer stock instead of cash when buying other businesses or attracting senior hires. Having a market value also helps when negotiating.

Reaching global investors

A listing widens the pool of people who can back the business. International investors often prefer public companies because information is easier to access and trades are more liquid. That mix of investors can help a company grow faster and manage risk better.

Going public isn’t without pressure. The company must answer to shareholders and the market every quarter. Still, for mature businesses looking to scale, it can be the next natural step.

The IPO process: from private to public

Going public isn't a quick decision. It's a long stretch of planning, paperwork, and regulation. Understanding how an IPO works means following a process that usually takes six months to a year. Here’s how it usually plays out.

Checking if the company’s ready

The first question to ask your team isn't how, but should we? The board needs to check whether the business is stable, profitable, and well-managed enough to face public scrutiny. Firms with uncertain revenues or weak management might stop here and take time to prepare.

Building the right team

When a business goes public, it hires specialists: investment banks, accountants, and lawyers. The banks serve as underwriters. They assist in determining the number of shares to be sold, what price to be charged, and they ensure that the company will raise a given amount of money. Smaller companies listing on Alternative Investment Market (AIM) must also hire a nominated adviser (Nomad) to guide them through the listing rules..

Preparing the prospectus

Every IPO needs a prospectus. It is a comprehensive public report describing what the company does, its financial background, its risks, and the reason why it is raising money. This should be reviewed and approved by the Financial Conduct Authority before the company can market its shares. At least three years of audited accounts are normally required.

Deciding the share price

Pricing is a combination of trial and error in the market, as well as investor response. The underwriters will discuss with the potential buyers what they are prepared to pay. They construct a book of orders based on that demand, and come up with an ultimate price that balances between raising and maintaining demand when the trading begins. From this point forward, your company reports results regularly and answers to a much wider group of shareholders.

Telling the company’s story

After the paperwork is cleared, your leadership team embarks on its roadshow, a couple of weeks of presentations to investors, explaining why the company is worth supporting. Larger IPOs include meetings across Europe and the US, while smaller ones keep the roadshow within the UK.

Listing day

Once all the preparations are made, shares are listed and trading starts. The company has a ticker on the exchange, and shares can be freely bought and sold.It might feel like the finish line, but it's actually the start of a new chapter. Henceforth, your company will have to present results on semi-annually and account to a broader group of shareholders.⁴

💡 Read more about selling your business as a UK company

Factors influencing IPO success

There’s no single formula for a good IPO, but a few things tend to make the difference between a strong start and a shaky one.

• Financial strength - Investors want to see consistent revenue growth and a clear path to profitability, not just hype. Clear accounts, a healthy balance sheet, and credible forecasts increase investor confidence can help secure better pricing. If a company can demonstrate its revenue model and potential growth, the market listens.
• Timing - Markets fluctuate. When investor confidence is high and capital is flowing, even moderately performing companies can attract interest. When markets turn cautious, even strong businesses struggle to price shares attractively.
• Management - A reliable leadership team matters. People want to know the business is in steady hands once it’s public and facing more scrutiny. Experience running larger operations helps here.
• Pricing - Set the price too high and shares can slip on day one. Too low and the company misses out on the funding it could have raised. The sweet spot is usually found after sounding out investors in the weeks before launch.
• Communication - Once listed, a company needs to keep talking. Regular updates, honest reports, and measured targets help keep investors calm when the market shifts.

A successful IPO often looks simple from the outside, but it takes planning, timing, and steady communication to keep both the market and investors onside.

Simplify global payments for your growing company

Once you go public, money starts moving across more borders. International investors buy your shares. You pay dividends in multiple currencies. Suppliers and partners are spread across different countries. Traditional banks can make this expensive because they add around 3 to 4% on every currency conversion, and the fees aren't always clear until after you've sent the money.

Wise Business keeps it simpler. You can hold money in 40+ currencies, get local account details in 8+ currencies, and send payments at the real exchange rate. No monthly fees, no surprise charges. If you're paying dividends to US investors or covering supplier invoices in Euros, you'll see exactly what it costs before you send anything.

Public companies get watched closely and your margins matter. Losing money to bank markups shows up in your numbers, and shareholders will notice. Wise helps you keep more of what you earn and makes international payments easier to send, receive and track, especially when everything connects to your accounting software.

Open a Wise Business account today and make managing global money simple from the start.

Register for Wise Business 💼

FAQs

How much does an IPO cost a company?

The cost of going public varies. In the UK, most companies spend between 5- 10% of the money they raise on fees. That includes underwriting, legal, accounting, and listing costs. The more complex the business or the larger the offer, the higher the bill.

What happens after an IPO?

Once a company’s shares start trading, it becomes publicly owned and must meet reporting rules set by the FCA and the London Stock Exchange.³ That means regular updates for investors, published results, and annual meetings.

For the finance team, it also means handling more international payments. Wise Business can make that part easier by managing multiple currencies in one place and keeping transfer costs low.

What is a “hot” IPO?

A “hot” IPO is one that draws a lot of attention before it lists. These are usually companies that people already know or industries that investors are excited about. Shares often sell quickly and trade higher on the first day, though the buzz can fade just as fast.

Sources:

1. London Stock Exchange ends a challenging 2024 on a high after Q4 IPO boost – Ernst & Young
2. AIM: What the alternative investment market is and how it works – Investopedia
3. FCA approves registration document – London Stock Exchange
4. Preparing and filing Companies House account – GOV.UK
5. Deliveroo IPO – CNBC
6. The evolution of SPACS – ARC Group
7. FCA publishes final rules to strengthen investor protections in SPACs – FCA

Sources last checked: 17-Oct-2025