Exit-stage tech: Going public or passing the torch is your heaviest lift yet

Evaluate and prep for next steps, whether IPO or private acquisition

Jun 02, 2023

Key takeaways

Your company has “grown up,” but that doesn’t mean it’s done growing. 

Your strategic vision must align with the company’s future needs, whether you’re ready for an exit or not. 

The people, systems and planning you require are very different for public vs. private exit. 

Technology industry

The company has grown in complexity, expanded its reach and matured—in a sense, you have reached a graduation point, though that doesn’t mean the evolution of the enterprise is over. Where does the company go from here? What is the best form for the company to take to reach the next level? What is your exit plan and what do you need to figure out to execute that plan?

Tax and other technical matters are just one part of the picture. When going through an IPO, you need to invest in planning just as much as the execution of the next stage. This is a transformational journey; you want to come out of it feeling like you did it the right way.
Caitlin Hughes, Partner, Technical Accounting Consulting, RSM US LLP

Key considerations for tech company success in the exit stage

The technical aspects of the late-stage evolution of your tech company are significant, but the tax and legal considerations don’t exist in a vacuum. You also have considerable strategic and planning responsibilities to shoulder on the road to paperwork, due diligence, audits and all the rest. Here are some of the top issues on your plate:

Earlier-stage growth focuses on sales and market penetration. By this expanded growth stage, it’s about how to scale the business up operationally and in terms of infrastructure, how to do more things at less cost and how best to allocate resources.
Eliot Mitchell, Director, Business Risk Consulting and ESG Risk and Controls Leader, RSM US LLP

Additional considerations

Just because a company is mature in terms of sales, market presence, reputation, etc., it isn’t necessarily mature from a process, procedure, infrastructure and management perspective. Make sure to evaluate your company at this late stage—even if you aren’t ready to consider an exit strategy—to ensure that the company is ready to handle continued evolution. Some factors to consider include:

  • Think more heavily about environmental, social and governance (ESG) issues, because those priorities can mean a lot in terms of investor interest and your public standing.
  • Although not integral to the exit process, you should be thinking about what processes you can automate—rather than just hiring people incrementally—as you scale to a larger operation that might be approaching Fortune100 size.
  • Enhance your cybersecurity efforts. Private equity and large companies do not want to acquire risk by acquiring you, so security is paramount. If you are considering an IPO, a security breach could become front-page news with your increased visibility and could sour investors on your offering.
  • In part related to cybersecurity, now is the time to hire a CIO, CISO and/or CTO if you haven’t already. Also, on the financial side, you need a strong controller or chief accounting officer equivalent.

Explore the four stages of the technology company lifecycle

Focusing on core functions while prepping for growth.

Build stature in the market with sales, scaling and automation.

Maximize value while prepping for exit, IPO or other late-stage goals.

Effectively manage your gross margin, access, and supply.

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