It’s no secret that Initial Public Offering (IPO) activities have been down in recent years, with many companies reverting to private or private equity (PE) backed statuses. This period of low activity has been longer than previous downturns, due to the massive blow dealt by the Covid-19 pandemic. However, the economy is notoriously cyclical and we may already be witnessing the early stages of a resurgence. 

This means that it’s crucial for companies to start thinking about exit readiness now, well in advance of any anticipated exit event brought about by a change in the market. 

Exit readiness lays the groundwork to prepare companies for a significant transition, such as an IPO, acquisition, merger, or sale. It involves ensuring that all financial, operational, legal, and strategic aspects of the business are in optimal condition to maximize value and facilitate a smooth and successful exit process. 

“A readiness assessment can be done fairly quickly and gives you perspectives on where you actually sit. This process helps to inform the things that you might want to look at as you continue to move forward.” 

– David Crowell, Partner, Lead to Revenue & Zuora Delivery at PwC

Watch the conversation on the journey to exit readiness 

The importance of proactivity

Companies often fall into the trap of under-investing in back-office functions such as finance, human resources, or IT—until it’s too late. Proactive planning related to these functions involves a thorough readiness assessment, focusing on people, processes, and systems to ensure smooth operations and scalability. 

“I think the mistake many companies make is they just navigate this reactively. You know, when the board or private equity or investors are reaching out and saying, ‘We have this market on the table, what if we’re public in eight months and we need to be on file with the SEC in four months?’ What if you’re going to get acquired in a few months and then you’re just reactive and hemorrhaging money? Readiness is the activity of handling this proactively. So it allows you to be in the driver’s seat.” 

– Erik Samuels, Director, Deals – Capital Markets & Accounting Advisory Services at PwC

The role of systems in exit readiness

One of the most significant challenges companies face when considering an exit opportunity is the readiness of their systems. Many companies operate on homegrown systems that are not scalable or efficient for IPO readiness. Investing in robust, integrated systems is crucial to support complex financial operations, particularly in consumption-based and hybrid monetization models.

“It’s systems that companies are tripping up on and it’s holding them back from what they’re trying to achieve with these exits and go to market.” 

– Erik Samuels, Director, Deals – Capital Markets & Accounting Advisory Services at PwC

4 key steps to achieve exit readiness

1. Readiness assessment: Conduct a comprehensive assessment to identify gaps and areas needing improvement across all back-office functions. This should include accounting, finance, IT, FP&A, HR, and legal.
2. System integration: Invest in scalable and integrated systems that can handle complex billing, revenue recognition, and data management needs. Look for a platform that offers solutions to support diverse pricing models and ensure accurate, real-time data processing.
3. Project management: Implement strong project management practices to prioritize critical tasks and ensure timely execution. Focus on “no regrets” items that benefit the company regardless of the exit path chosen.
4. Stakeholder alignment: Engage with stakeholders regularly to update them on progress and adjust plans as necessary. Maintaining flexibility and adaptability is key in the face of market uncertainties.

Start preparing now and be ready for any opportunity 

Exit readiness is not just about preparing for an IPO, but ensuring that the company is in a strong position to capitalize on any exit opportunity. By investing in integrated systems, conducting thorough readiness assessments, and maintaining a proactive approach, companies can navigate the complexities of the modern market and achieve successful exits. As the market evolves, staying ahead with modern monetization strategies and robust operational readiness will be key to sustained growth and success.