Three Ways to Go Public in the U.S.

Private companies looking to go public in the United States typically consider one of three options: an Initial Public Offering (IPO), a Direct Listing, or a merger with a Special Purpose Acquisition Company (SPAC), commonly referred to as a De-SPAC. Each approach has unique benefits, costs, and requirements. Below is an overview to help determine which path best fits your company’s strategy and stage.

1. Initial Public Offering (IPO)

An IPO is the most recognized and traditional method of going public. Through this process, a company offers shares to the public via underwriters and lists on a U.S. stock exchange. The process generally takes 6 to 9 months and involves regulatory filings with the U.S. Securities and Exchange Commission (SEC), extensive financial disclosures, and investor roadshows.

While often associated with large “unicorn” startups, even smaller companies can conduct IPOs. However, this path requires a strong internal compliance structure, transparency, and the ability to undergo ongoing scrutiny from investors and regulators.

Key Considerations:

• Pre-IPO valuation is critical and influenced by market trends, competitor performance, and investor demand.
• Underwriter fees can range from 3% to 7% per share.
• IPOs often provide credibility and investor confidence but come with high regulatory and financial responsibilities.

2. Direct Listing

A direct listing allows a company to list its shares on a stock exchange without the help of underwriters, avoiding substantial fees. Instead of issuing new shares, existing shareholders sell their shares directly to the market.

This method is generally faster and more cost-effective but carries the risk of limited initial investor interest and share price volatility. The company must still meet the same regulatory requirements and timeline (6–9 months) as an IPO.

Key Considerations:

• No underwriter commissions.
• No need for a traditional investor roadshow.
• Risk of unpredictable initial trading and lack of demand.

3. SPAC Merger (De-SPAC)

SPAC mergers have become a popular alternative for companies seeking a faster route to public markets. A SPAC is a publicly listed shell company formed specifically to acquire a private business and take it public through a merger.

Once the SPAC identifies and negotiates a merger with a target company, the process typically takes 3 to 4 months. After filing Form S-4 with the SEC, the merged entity becomes publicly listed.

Key Considerations:

• Shortest path to going public (3–4 months).
• Access to capital and public markets with fewer upfront disclosures than a traditional IPO.
• Valuation is negotiated directly with the SPAC, not the broader market.

Conclusion: Choose What Fits Your Business

Each listing method has its own advantages depending on your company’s goals, readiness, and timeline. IPOs offer prestige and credibility; direct listings minimize cost and dilution; SPAC mergers provide speed and flexibility. It’s crucial to assess your capital needs, internal capacity, and long-term strategy—and consult with advisors—to select the best route to public markets.

Let us help you evaluate your options and prepare for a successful listing in the United States.

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