This article builds upon insights featured in our whitepaper on European tech IPOs. Download the full report here: European Tech IPO Barometer
IPO Preparation
IPO preparation has become a strategic function. For institutional investors and CFOs of pre-IPO private companies, preparing for a public offering involves more than regulatory compliance—it requires demonstrating operational maturity, financial resilience, and transparent governance. Given the increased selectivity of investors and the lengthening of holding periods, this preparation must begin early and be part of a long-term strategic vision.
How Market Conditions Have Redefined the IPO Timeline
Macroeconomic volatility, tightening monetary policies, and heightened expectations from institutional investors have extended the average timelines for an IPO. Today, tech companies often need 18 to 24 months to establish operational rigor, financial reporting, and investor communication processes.
This need is particularly pronounced in the tech sector, where scalability often conflicts with profitability.
IPO Preparation Criteria for Tech Companies
To meet IPO requirements, companies must produce audited financial statements in compliance with IFRS or US GAAP standards. They also need to establish consistent KPI reporting and financial forecasting processes aligned with investor expectations.
A clear governance structure with independent oversight, along with a mature financial management and legal compliance structure, is essential to build investor trust in public markets.
The role of valuation in IPO preparation
Valuation is not only a measure of potential investor appetite but also a tool for internal alignment and capital strategy. For tech companies, selecting the right valuation methodology and preparing credible comps is indispensable.
Transitioning from Revenue Multiples to EBITDA Multiples
Fast-growing companies often highlight their revenue multiples—especially in SaaS or platform models, where profitability is delayed due to acquisition investments. However, as an IPO approaches, it often becomes necessary to adopt an EBITDA or Free Cash Flow logic to meet institutional investor standards.
Understanding the True Drivers of Valuation at an IPO
Growth trajectory and revenue visibility
High-quality revenue is repeatable, predictable, and diversified. Indicators such as Net Revenue Retention (NRR), Annual Recurring Revenue (ARR), or Customer Lifetime Value (LTV) provide a more nuanced understanding of growth sustainability than gross revenue.
Profitability, burn rate and cash flow projection
Investors increasingly favor models of efficient growth. Immediate profitability is not always required, but the path to positive cash flow must be justifiable and documented. Companies must demonstrate control over operational levers to improve gross margin and the effectiveness of their commercial actions.
Governance, capital structure and use of venture debt
Clear governance often differentiates between companies that succeed and those that fail at their IPO. CFOs must ensure proper board composition and the coherence of the cap table, accounting for convertible instruments or venture debt transparently in documentation and valuation models.
Risk and liquidity scoring: the new must-haves before the IPOs
How resilience influences valuation
Resilience scoring assesses a company’s structural robustness—beyond just financial health. Excessive dependence on a major customer, a single supplier, or a key individual is penalised in resilience models.
ScaleX Invest integrates indicators such as revenue concentration, supplier diversity, regulatory exposure, and reliance on key employees into its scoring tools, providing investors with an adjusted risk perspective.
Meanwhile, liquidity forecasting quantifies funding needs under various market and performance scenarios. It covers bridge-to-IPO planning, dilution modeling under different valuation scenarios, and the alignment of financing timelines based on the runway. This allows CFOs to identify the optimal timing for going public.
Integrating a Scenario Approach for Pre-IPO Scoring
Valuation tools based on scenarios allow for simulating different exit paths based on internal variables (growth, margin, cash burn) and external conditions (macroeconomic context, market conditions). This approach also helps assess sensitivity to operational underperformance and anticipate market multiple volatility according to sector dynamics. By providing a clear view of risks and their potential impact, these simulations strengthen the credibility of financial narratives and facilitate strategic communication with institutional investors.
How ScaleX Invest helps tech companies get IPO-ready
Exclusive Database of Private and Pre-IPO Transactions
Our valuation models are supported by 20,000+ private transactions, allowing for finer benchmarks when public accountants are limited. Proprietary sector indices are generated from data on SaaS, fintech, deeptech, and other innovative sectors.
AI-Based Valuation Models with Backtesting
ScaleX Invest's models are trained on over a decade of financial data, existence data, and market cycles. This enables us to offer scenario-based valuations and predictive scoring tools, statistically validated and used by institutional investors.
API Access and Real-Time CRM Integration
Our system seamlessly integrates with CRM and reporting tools. CFOs can access valuation updates, generate investor reports, and simulate exit scenarios in real-time, from a unified interface.
Request a free demo to learn more!
FAQs
What is the right timing to prepare for an IPO?
Most companies should formally begin their IPO preparation 12 to 24 months before listing. This allows time to conduct audits, strengthen governance, and build a solid valuation history.
How can I tell if my valuation is consistent for an IPO?
An "IPO-ready" valuation reflects the fundamentals of the company while being consistent with market comparables. It is based on solid assumptions, credible growth forecasts, and a good understanding of investor expectations. Solutions like those from ScaleX enable this valuation to be objectified and gain credibility in the market.
What data does ScaleX use in its valuation models?
ScaleX utilises a unique cross-section of sources: data from listed markets, private transactions, exclusive benchmarks, and information validated by executives. This hybrid approach allows for contextualised, reliable valuations tailored to each company's specifics.
To explore more data-driven insights and market benchmarks around tech IPOs, download our European Tech IPO Barometer whitepaper.
