The IPO process, end to end

The question behind the question

Asking a candidate to walk through the IPO process is one of the most common ECM technical questions, and it is testing something more specific than whether you can recite a sequence of steps. It is testing whether you understand why each stage exists, what risk it manages, and who is actually doing the work at each point, since a candidate who can only produce a list of stage names without explaining the purpose behind them has memorized an outline rather than understood a process. The stages below follow the standard path for a US-listed IPO under the traditional registration process (an S-1 filed with the Securities and Exchange Commission), which remains the frame interviewers expect even though direct listings and SPACs get a company to the public markets through a different mechanical path.

Stage 1: organizational meeting and mandate

The process formally begins with an organizational meeting, sometimes called the "org meeting," where the company, its underwriters (the banks that will lead the offering), lawyers for both sides, and the company's auditors all sit down together and set a working timeline. By this point the company has typically already selected its lead underwriters, often called bookrunners, through a competitive process where several banks pitch for the mandate, and origination bankers have already done significant work building the case for why the company should go public now, at what size, and at what illustrative valuation. This early groundwork is where ECM's origination function, covered in what ECM bankers actually do, does most of its work before the process becomes public.

Stage 2: due diligence, drafting, and the S-1

Once the deal team is set, the real work of due diligence and drafting begins, and it typically takes far longer than any other stage. Lawyers and bankers dig into the company's financials, contracts, litigation history, and business risks, both to protect the underwriters from liability (an underwriter can be held responsible for material misstatements or omissions in the offering documents) and to build an accurate picture of the business for the prospectus. In parallel, the deal team drafts the registration statement, called an S-1 in the United States, a lengthy document that describes the company's business, financial statements, risk factors, and the terms of the offering. Drafting sessions, where the full deal team reviews and revises the document line by line, can run for weeks, and getting the S-1 right the first time matters enormously, since every subsequent public filing in the process is effectively an amendment to it.

Once the company files its S-1 publicly, it enters what is commonly called the quiet period, a stretch during which securities law restricts what the company and its underwriters can say publicly about the offering, specifically to prevent conditioning the market with promotional statements outside the carefully vetted and legally reviewed offering documents. This is why companies preparing to go public are typically cautious about press and public statements in the months around a filing, and why marketing a deal has to happen through the formal roadshow process described below rather than through ordinary public communication.

Stage 3: SEC review and amendments

After the initial S-1 filing, the SEC's staff reviews the document and typically comes back with comments, questions, or requests for additional disclosure or clarification. The company and its lawyers respond, often filing one or more amended versions of the S-1, until the SEC has no further comments and the registration statement is ready to be declared effective. This back-and-forth can take anywhere from a matter of weeks to considerably longer depending on the complexity of the business and how many rounds of comments the SEC raises, and it runs largely in parallel with the deal team continuing to prepare for the next stages, since the company does not simply wait idle for SEC clearance.

Stage 4: the roadshow and bookbuilding

Once the deal team has a credible price range in hand, built from comparable companies and refined through informal conversations with potential investors sometimes called testing-the-waters meetings, the company files an updated S-1 with a preliminary price range and begins the roadshow. Company management, typically the CEO and CFO, travels (in person, virtually, or both) to meet with institutional investors over a period of roughly one to two weeks, presenting the investment case and taking questions directly. Simultaneously, the syndicate desk opens the order book, collecting indications of interest from investors: how many shares they would want, and at what price within (or sometimes outside) the marketed range. How the syndicate desk works covers exactly how that book gets built and read in real time, which is the core skill this stage is built around.

The roadshow is also where the earlier, quieter work compounds: an origination banker who correctly gauged investor appetite when setting the initial range, and a syndicate desk that reads the incoming book accurately as it fills, are the difference between a deal that has genuine, durable demand at the final price and one that only looks strong on paper.

Stage 5: pricing

On the evening the roadshow concludes, the deal team holds a pricing call, or pricing committee meeting, reviewing the final state of the order book, typically several times oversubscribed for a well-received deal, and deciding on a final offer price and share count. This is where the tension between "clear the deal at the highest price possible" and "leave room for the stock to perform well once it starts trading" gets resolved in real time, a judgment call covered fully in how an IPO actually gets valued and priced. Once the price is set, the underwriting agreement is signed, the final prospectus is filed, and the deal is priced, meaning investors who received an allocation are now contractually committed to buy their shares at that price.

A related structural point interviewers like to check: in almost all US IPOs, the underwriters sign what is called a firm commitment underwriting agreement, meaning the banks themselves agree to buy the entire offering from the company at the agreed price and then resell it to investors, rather than simply acting as an agent trying its best to place the shares. This shifts real risk onto the underwriters between the moment the deal prices and the moment it settles and begins trading a few days later; if something goes badly wrong in that short window, the underwriters, not the company, bear the immediate financial exposure. In practice this risk is well understood and priced into the underwriting spread, and by the time a deal actually reaches pricing the book is already thoroughly vetted, but it is a meaningfully different legal structure than a "best efforts" offering, where an underwriter only promises to try to sell the securities and the company bears the risk of an undersold deal directly.

Stage 6: trading debut, the aftermarket, and what can go wrong

The stock begins trading on the exchange the next morning, typically opening somewhat above the offer price if the deal was well received, an opening auction process run by a designated market maker rather than simply "starting" at the offer price. From this point, the syndicate desk's job shifts to stabilization: using the greenshoe, an option to sell up to 15% more shares than the base deal size, to buy stock back in the open market if the price weakens in the first days of trading, supporting the price without the bank taking on unlimited risk. Existing shareholders, largely insiders, employees, and pre-IPO investors, are typically subject to a lockup agreement, usually 90 to 180 days, preventing them from selling their shares immediately, which keeps the newly public float smaller and more supportive of the price in the deal's early life. When that lockup expires, a large number of new shares can become sellable at once, an event the market often anticipates and prices in ahead of time.

Interviewers sometimes ask what happens if a deal runs into trouble, and it is worth knowing where problems tend to surface. A prolonged SEC review can push a company's planned launch into a worse market window, forcing a delay that has nothing to do with the company's own fundamentals. A weak roadshow, where investor feedback comes back tepid on price or size, can force the deal team to lower the price range, shrink the deal, or in some cases postpone it entirely rather than launch into insufficient demand. And a deal that prices well but trades down hard in its first days, sometimes called "breaking issue price," is a visible, public signal that the deal was priced too aggressively, with consequences for the company's and the underwriters' credibility on the next transaction, whether that is a follow-on offering or something else entirely.

Practice question

Walk me through the IPO process from start to finish.

It starts with an organizational meeting, once a company has selected its underwriters, where the full deal team, bankers, lawyers, and auditors, sets a working timeline. From there the biggest chunk of time goes into due diligence and drafting the registration statement, the S-1, which describes the business, its financials, and the risks, and once that's filed publicly the company enters a quiet period restricting promotional public statements. The SEC then reviews the filing and comes back with comments, and the company amends the S-1 until the SEC clears it. Once the deal team has a credible price range, the company files an updated S-1 with that range and starts the roadshow, management meeting investors directly while the syndicate desk builds the order book in real time. On the evening the roadshow ends, the deal team holds a pricing call, reviews the book, and sets a final price that clears the deal but leaves room for the stock to perform afterward. The next morning the stock opens for trading, and the syndicate desk shifts into stabilization mode, using the greenshoe to support the price if it weakens, while existing shareholders stay locked up for a period, usually a few months, before they can sell.

What the interviewer is listening for: Whether you can explain why each stage exists, not just name it in order. Mentioning the quiet period's legal purpose and the tension in pricing (clearing the deal versus leaving room to perform) signals real understanding rather than a memorized outline.