INSIGHT

Despite market volatility, IPO preparedness for technology companies is essential 

David Aiello • May 21, 2025

Industries: Technology

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Technology companies considering an initial public offering (IPO) may be unsure if this is the right time given the shifting sands. The wave of offerings that many expected following the presidential election has been met with market uncertainty, tariff announcements, regulatory changes, and fluctuating investor confidence.  

Nevertheless, preparing for an IPO remains a critical strategic priority for many tech companies. And those with the best shot at success in public markets are those who begin their readiness journey well before they ring the opening bell. 

Market conditions create a strategic opportunity 

Several high-profile tech companies have recently said they’re holding off on their IPOs for now. This hesitation is understandable. Many companies that have been waiting years to go public find themselves continuing to wait. 

“Current market conditions and volatility might have some IPO path companies decide to delay their debut and readiness activities. However, we strongly recommend that entities continue their journey to IPO readiness so that they can time the market when the conditions present themselves.” – Will Tanem – Partner, Technical Accounting & IPO Readiness  

Companies that use this time to strengthen their financial infrastructure, governance, and operational processes will be better positioned to move quickly when market windows open. 

The true value of IPO readiness 

IPO readiness is more than just checking regulatory boxes. It’s about transforming your organization into one that can thrive under the scrutiny and demands of public markets.  

Companies that invest in readiness typically see benefits that extend far beyond the IPO itself: 

• Enhanced financial visibility and control 
• More robust governance structures 
• Streamlined operational processes 
• Accelerated financial close processes 
• Greater ability to scale with confidence 

What makes tech IPOs different from other industries 

Technology companies face unique challenges and opportunities when preparing for an IPO compared to businesses in other sectors. Understanding these differences is crucial for tech leaders planning their public market journey. 

Growth over profitability 

The US IPO market is focused on growth and has historically been tolerant of companies with little to no profitability. This is particularly evident in the technology sector, where companies often prioritize user acquisition, market share, and revenue growth over immediate profitability. While this creates opportunities for tech companies to access public markets earlier in their lifecycle, it also means they face heightened scrutiny around their path to profitability and business model sustainability. 

Volatility and market dynamics 

Technology stocks typically experience higher volatility than other sectors, which can make timing an IPO particularly challenging. This volatility can be attributed to several factors, including rapid innovation cycles, shifting competitive landscapes, and the sector’s sensitivity to changing economic conditions and interest rates. 

Valuation complexity 

Tech companies often derive significant value from intangible assets — intellectual property, proprietary algorithms, user data, and network effects — which are inherently more difficult to value than physical assets or predictable cash flows. This can lead to wider valuation ranges and more debate among investors during the IPO process. As a result, tech companies must be particularly diligent in articulating their value proposition and growth trajectory to potential investors. 

Specialized financial metrics 

Unlike traditional industries that focus primarily on GAAP metrics, technology companies often emphasize additional key performance indicators such as monthly active users, customer acquisition costs, lifetime value, and annual recurring revenue. These metrics can provide important context about a company’s growth trajectory and business model efficiency, but they also require more sophisticated financial reporting capabilities and investor education. 

Talent considerations 

For technology companies, an IPO represents not just a financial milestone but also a critical talent event. Stock options and equity incentives are core components of tech compensation structures, and the public offering directly impacts employee wealth and retention. Tech companies must develop comprehensive strategies for employee communication, equity refreshes, and retention programs as part of their IPO preparation. 

Timing the market vs. being prepared for the market 

In volatile markets, windows of opportunity can be fleeting. Companies that continue their readiness efforts now will be positioned to act quickly when favorable conditions emerge.  

Rather than attempting to perfectly time the market — which is virtually impossible — focus instead on being prepared to enter the market when timing is favorable. 

Market trends to watch 

Several factors are currently influencing the IPO landscape: 

• Tariff announcements and regulatory changes creating uncertainty 
• Market volatility shaking investor confidence 
• Inflation concerns triggering market jitters 
• Emergence of new technologies reshaping competitive landscapes 
• Trade policy uncertainties and recession concerns causing elevated volatility 
• Duration of market reaction to ongoing volatility affecting IPO activity recovery 

Alternative paths to public markets 

While many technology companies are delaying their traditional IPO plans, Special Purpose Acquisition Companies (SPACs) continue to offer an alternative route to public markets. Despite the SPAC boom cooling from its 2021 peak, this merger approach remains attractive to tech companies seeking public status with potentially less market timing risk, greater valuation certainty, and a streamlined process.  

Rather than weathering the unpredictable traditional IPO window, tech companies can negotiate fixed valuations with SPAC sponsors, often securing deal terms that might be unattainable in today’s volatile market.  

The SPAC process also typically involves less regulatory scrutiny and can be completed in a shorter timeframe than a traditional IPO, allowing companies to maintain focus on their core business while still accessing public capital. For technology companies caught in the IPO waiting game, partnering with the right SPAC can provide an efficient path to liquidity while maintaining readiness for either transaction type. 

Other alternatives include: 

• Regular tender offers allowing employees and shareholders to cash out 
• Large private funding rounds that include secondary components 
• Structured liquidity events for long-term private companies 

While these options provide flexibility, they don’t eliminate the need for strong financial infrastructure and governance. In fact, many of these alternatives still require levels of readiness similar to public companies. 

How BPM supports your IPO preparation 

At BPM, we understand that the path to an IPO is both exciting and demanding. Our approach to IPO readiness is designed to support your unique needs throughout the entire process: 

• Assessment phase: We work closely with your leadership team to evaluate current operations against public company expectations, identifying crucial gaps and developing a customized readiness roadmap. 
• Preparation phase: Our team helps implement necessary changes across financial reporting, controls, governance, and technology to transform your business into one that can withstand public market scrutiny. 
• Execution phase: We provide guidance through the complex filing and offering process, supporting your team as you navigate regulatory requirements and investor expectations. 

Our interdisciplinary team brings together specialists in technical accounting, SEC compliance, risk assurance, transaction advisory, business valuation, and HR consulting—all working together to support your IPO journey. 

Start your IPO readiness journey today 

Market volatility shouldn’t derail your long-term growth strategy. By investing in IPO readiness now, you can position your company to capitalize on favorable market conditions when they arise while building a stronger organization regardless of your ultimate path to liquidity. 

Connect with BPM’s IPO Readiness team today to discuss how we can help prepare your technology company for its next phase of growth. Our advisors can provide a personalized assessment of your readiness and help develop a strategic roadmap tailored to your specific needs and timeline.