The following is a guest post from Jeff Majtyka, founder and president of Ellipsis, a boutique capital markets and investor relations advisory firm. Ronald Clark is a senior adviser to the firm. Opinions are the author’s own.
As companies position for IPOs in 2026, we see that investors are likely to remain “selective” in a market rife with complexities. That raises the risk that executives and boards at companies seeking to go public will focus on “getting out” versus what it takes to succeed in the aftermarket.
At our firm, we have a mantra: “Being public is harder than going public.” That’s not meant to say IPOs are easy — quite the contrary, it’s to say that an IPO is just the start of a challenging journey.
As advisers to companies both before and long after IPOs, we see several common pitfalls that can pre-determine success in the aftermarket, from critical early choices to how ready the company is for the spotlight when listing day arrives. We highlight a few of the key risk points here.
Choose wisdom over prestige
An IPO is a prestigious event. Companies are drawn to marquee banks, high-profile law firms and star advisers — especially the chosen investment bank’s lead adviser for the IPO — based on an expectation that their reputations will create a halo effect in the marketplace. While investors will look for these endorsements of the company and its executive team, it’s vital to avoid confusing reputation with effectiveness.
We have seen companies prioritize the “name on the door” over the individuals who will challenge assumptions, push back when necessary, and remain accountable for long-term outcomes.
The issuer does have agency to select its adviser; the question is, did it take enough time evaluating people to create an informed opinion?
We often see the importance of this decision in key early investor relations decisions. For example, to get the most attractive initial evaluation, companies are often advised to adopt the reporting metrics and methodologies of the most valuable bellwethers in their industries — even when they don’t track or incentivize managers on those chosen metrics.
Things may be fine if growth rates, margins and those metrics exceed investors’ expectations. However, when they diverge, questions arise, trust is lost and stocks quickly lose value. After such an event, it can take quarters or years to regain investors’ trust, if ever. The best advisers will steer their clients around these traps by focusing on what drives long-term value.
For CFOs, the lesson is straightforward: If forced to choose, prioritize effective counsel over prestigious logos. This is not always easy, particularly for visionary founders, but deal teams can be structured so at least one adviser is empowered to be a true thought partner and to “own” the outcome, not just the transaction.
Know your stock’s story
Recent press about SpaceX’s early IPO planning highlights a key part of the process: Inviting in potential bankers to pitch how they would value the company and sell the story.
Selling an IPO is an art form, and bankers excel at it. The risk point for management and the board is buying too much into the pitch without a grounded understanding of what really drives the fundamental value of the company in the eyes of investors, and how that will play in the aftermarket.
For example, we saw a well-known company that went public a few years ago follow its bankers’ lead, pitching the company as a marginal “growth” story — when it was really an attractive and steady cash-flow story — in hopes of attracting a better initial valuation at IPO. This led the company to follow the IPO with speculative investments in growth initiatives to help make that story a reality.
With the stock having failed to appreciate several years after the IPO, investors have since gotten restless as these initiatives have failed to pan out. They’ve pushed management to maximize shareholder value by owning what is unique about the company and executing accordingly, rather than trying to be something outside their grasp.
Knowing who you are and carefully aligning your positioning, reporting metrics and investor engagement strategy to fit and support that identity are vital to attracting and building a strong investor base that will endure well beyond the IPO.
Manage expectations with confidence
Responsible companies embrace IPO readiness, making sure they have public-company systems, processes and controls in place well before going out is critical.
But where mistakes get made is when the executive team and board are not fully prepared to withstand the extreme scrutiny of being a public company. It’s absolutely critical to ensure the CFO and finance organization are up to the critical task of managing Wall Street expectations.
We frequently see companies try to set the guidance model too close to internal forecasts before the IPO to maximize the offering’s success. Unfortunately, analysts from the underwriting syndicate build their models to this outlook. Not leaving enough room to demonstrate that you can achieve a “beat-and-raise” cadence as a public company, or at least having a cushion for unexpected developments, can lead to mismanaging expectations out of the gate.
It’s a setback that’s near impossible to recover from and puts at grave risk the reputations of your company, management team and board. It’s also easily avoidable.
For CFOs, it is especially important to manage the board’s expectations around guidance. We have seen far too often an unwillingness among board members to allow companies to temper initial Street expectations for fear of dampening investor enthusiasm. That can send the company on a relentless chase of barely achievable guidance and set them up for failure by over-prioritizing short-term performance at the expense of their strategic priorities.
Pressure-test the bear case
Every stock has a bull-and-bear thesis, and both are formed during the IPO process. However, as momentum builds toward listing, the internal echo chamber among advisers and management can drown out uncomfortable questions.
Where we often raise our hand in an IPO process is when we think messaging risks are being discounted. This shows up most prominently in lack of Q&A preparation, especially in the trenches with tough questions that are central to valuation, like margin trajectory, growth-rate sustainability or regulatory or competitive risks.
Bear in mind that when investors are evaluating the story, they’re focused on the vision, strategy and leadership of the CEO delivering it. And when they’re valuing the company, they’re focused on their belief in the financial model and the CFO’s ability to deliver on it.
The IPO process provides valuable opportunities to pressure-test the narrative through pre-IPO “testing the waters” engagement with institutional investors and syndicate analyst feedback. CFOs should use that feedback to bullet-proof the story, ensure KPIs are well-aligned with achievable milestones, and prepare a clear plan for reinforcing the investment thesis in the aftermarket.
Too often, we see these key investor relations initiatives get deferred, leaving companies reactive during their most vulnerable first few quarters as public issuers. The aftermarket isn’t the time to improvise.
In our experience, even if the IPO process is mapped out carefully, there are landmines throughout, from adviser selection to when the last piece of confetti falls as you ring the bell. The ability to avoid them and willingness to prioritize long-term credibility over short-term optics is the true test of whether a company is ready to “live public,” not just “go public.”
