Inside the IPO: The ultimate guide to going public
By Aaron Skonnard | November 01, 2018
The ultimate guide to going public
Reflecting on the process of making Pluralsight a public company revealed a whole list of “things I wish someone had told me.” Leader to leader, I wanted to share what I learned on the way to this important milestone. Wherever your company finds itself on the IPO journey, preparing for the road ahead is critical to success, and made easier when you can see what lies in front of you.
Step 1: Making the decision to go public or not
Having made it through successfully taking Pluralsight public, I can tell you the question I answer most frequently is the same one you should start with:
Why go public? Why not stay private?
Getting clear on the “why” from the start will guide the many subsequent decisions you’ll have to make. The answer will vary from company to company. Some are no longer able to raise money from private investors. Others have strategic reasons. Still others seek to provide flexibility and liquidity to their early investors and employees. And some just want to IPO for the sake of it.
For Pluralsight, we went public primarily to increase our brand awareness across our core markets. We generate over $200M in annual billings, have historically been cash flow positive and have a fantastic financial backer that has demonstrated willingness to provide more capital when needed, so we didn’t need to raise money. Liquidity to early investors and employees is nice but not something we felt was urgent. The transparency that comes with going public, however, almost instantly boosted our credibility with large, multinational enterprise companies. This visibility (and subsequent growth) is central to our future strategy.
Once you’ve nailed the “why,” start asking “when?”
How do you know when the time is right?
Near the end of 2016, our senior leadership team and board identified clear milestones we’d need to achieve for all of us to have confidence in pursuing the public path. We agreed that we wouldn’t spend a lot of time talking about going public until we had reached those milestones, which provided a lot of clarity for the entire group.
We agreed to work toward:
- Multiple quarters of growth above a certain threshold
- Confidence in future growth for a specific number of quarters
- Strong cash-flow levels above a certain threshold
- Various compliance checkboxes completed
Agreeing on these milestones removed any ambiguity or debate about taking the company public before we were ready. The board wouldn’t push for it, and neither would management.
That agreement (and the ramp-up time it afforded us) helped us set our compass and organize our priorities and efforts. It also made it easy for us to find the right moment to move forward after regular check-ins on our progress and a strong year for the company overall. We made the decision to file confidentially at the end of 2017—after we saw a full year of results.
Commit to the process
Once you’ve decided to set out on your IPO journey, there are a number of big decisions you need to make. Get clear on the preparation and process that lies ahead, identify the bankers and other partners you’ll work with, define how you think about price and valuation and decide the size of the offering.
Remember, you need to know what you want out of the IPO. Getting clear on our intentions helped us lay out a long-term plan, and as a bonus, made the entire voyage less stressful.
As an example, we decided early on that we wanted to sell 15 percent of the company through our IPO. We were aiming to be free cash flow positive quickly while driving growth in our business. Because we didn’t need to raise vast amounts of money to drive our strategy, we had the freedom to fix the dilution by capping the number of shares we’d sell, which we believe helped our pricing and smoothed out the process along the way. We no longer had to debate the number of shares. The only remaining question was the price per share, which would ultimately determine our offering’s total dollar amount. We got clear with our bankers on what we believed would be the right initial price range and what milestones we’d want to see before raising it. As a result, we didn’t spend countless hours debating points like these when we were already on the road to IPO.
Your intentions might be different—you may need to raise capital, fund growth or maximize cash. Whatever they are, hold a candle up to the light—make sure you’re clear on what you want to achieve and create alignment with your bankers.
With clarity in place, we moved forward in late 2017, connecting with our lead banker well in advance of our intended IPO date to get the ball rolling. We decided to keep the potential filing confidential for as long as possible to streamline the S-1 process, reserve the opportunity to give a go/no-go call as was warranted, and protect our preparation efforts.
Get the right team and partners in place
The amount of work that comes with an IPO is overwhelming but having the right internal team and external partners in place makes uncharted territory simple to navigate.
If you’re a CEO with no previous public company experience, like me before 2018, ensure you have that experience in your CFO and legal team. It’s also helpful to have public company experience in key roles on your management team plus external advisors and coaches to help you along the way.
Most companies choose to do a bake-off with bankers, hearing pitches from multiple banks on what they offer and why they’re right for your business. Because we filed confidentially, we skipped this in order to maintain privacy and increase efficiency. Instead, we chose our lead banker early, selecting Morgan Stanley because we built a strong relationship with them over several years and they knew our business best. It wasn’t until later, after we had already drafted the S-1, that we selected the rest of our banking syndicate.
On the legal side, choose a firm that has deep experience working on IPOs. We selected WSGR because of their experience with and ability to navigate the complicated world that is the SEC.
Doing it this way may not be right for your company, but choosing our lead banker and legal counsel early in the journey made it possible for us to streamline the entire IPO process. Ultimately, you’ll know you have the right team in place if you experience things going smoothly.
Drafting and filing your S-1
Even with the right teams in place, there’s no question about it: Completing the S-1 is a heavy lift, and the process takes months with numerous back-and-forths with the SEC. But when you place trust in your legal and financial teams, it will be easier.
This hundreds-pages long document is a monumental effort—essentially like writing a book on your company. Not only do you have to accurately describe your business (financial statements, value proposition, competitive strengths and future plans for growth, to name a few), you also have to provide risk factors, or reasons why it could go wrong for investors. This means picking apart your business, which is always hard to do.
Preparing the S-1 involves a tremendous amount of data gathering and quarters of audits to make sure the numbers are air tight. It requires the collaborative efforts of your finance, legal, investor relations, product, marketing and communications leaders, and has to be reviewed and approved by the SEC before you go public.
It’s important to get the S-1 right because it lays the foundation for the story you’ll tell in your roadshow video and presentations with investors. These meetings are your shot to tell your company story effectively, and they require a lot of practice and preparation, which is your next stop in this IPO guide.
Step 2: So you’ve decided to go public: Preparing your company story
After deciding the “why” and “when” on the journey to going public, a big mountain to climb is building out your company story effectively for an investor audience through the roadshow presentation and video.
From “test the waters” to investor roadshow
In preparation for the IPO roadshow, the S-1 needs to be reduced down to bite-sized chunks for quick consumption by investor audiences. Before filing the S-1 publicly, companies are usually afforded the opportunity to pressure-test their message and performance in front of investors to see if it resonates. This is often a one-week experience filled with what’s commonly referred to as “test the waters” meetings that help to refine your message through real-time feedback about potential gaps in your company's story.
Assuming your “test the waters” visits are successful, you remain committed to moving forward with the public offering and you’ve filed your S-1 publicly, you finish preparations and move to the full roadshow. The roadshow is an intense 8-9 days of sharing your company presentation to investors in more one-on-ones and in large and small group meetings.
I found it highly energizing to tell potential investors our story. I never tire of sharing our company’s mission, the incredible platform we’ve created to drive performance for the companies we serve, the world-class community of authors we’ve assembled and the work of our amazing Pluralsight team members. After 14 years driving this business, I know our story well, but I still put a lot of effort into refining it to highlight our historical successes, the challenges we’ve overcome, the value we create for our customers and our vision for the future.
Refining your company story
I simply can’t overstate the value of presentation training, especially on the road to IPO. Practicing a story aloud up to 100 times is difficult, takes a lot of time and may not be top-of-mind because you already know your story so well. I founded Pluralsight 14 years ago and know our story like the back of my hand, but dedicating time to presentation training helped me refine and tell it in a way that resonated for investors.
Being able to tell our story effectively was assisted by a presentation trainer, Jerry Weissman. One of Jerry’s tips was to start by determining the key message you want your audience to walk away with, which Jerry calls your Point B. The idea is that you’re taking your audience from where they’re at as you start your presentation (Point A) to your objective (Point B). Once you’ve identified your Point B, you can start brainstorming all the supporting topics you want to get across and then “cluster” them into broader categories in order to make them easier to remember. (To learn more about his methodology, I recommend reading his book Presenting to Win: The Art of Telling Your Story.)
Jerry worked with our presentation team—our CFO, CXO, director of investor relations and me—through many repetitions to ensure we could create highly personal connections when telling our company story. The “test-the-waters” meetings gave us the opportunity to verbalize our story more than 20 times in a real-world setting and refine it as we went. All this preparation went a long way in solidifying our comfort and confidence levels during the investor roadshow.
An important commitment our presentation team made to each other going into each meeting was that we would make it better than the last one. We entered each one full of energy. Each night, we regrouped to discuss how we could make the next session even better. And during our morning jogs, we practiced again. It worked. Our very last meeting of the entire trip happened to be one of our best with a bank that has now become a top five investor and big believer in our story and our mission.
Nailing the Q&A
Our training leading into the roadshow was invaluable. By the time we hit the actual roadshow, we had already held two mock earnings calls with full Q&A from selected outsiders. We enjoyed a successful “testing-the-waters” week several weeks prior, and we prepped in Q&A sessions with internal audiences, our presentation coach and our bankers.
For the Q&A sessions that happen with investors leading up to IPO day, work with your team, bankers included, to compile a list of potential questions in advance. And again, practice your answers to make sure you’re conveying the true value of your company’s mission, purpose and direction.
Q&A becomes especially important a few days into your roadshow because potential investors have likely already seen your roadshow video, met with you before (during “test-the-waters” or in group sessions), reviewed the S-1 and will not want you to present to them again. When you show up, they’ll be ready for you with a long list of questions, and that’s the entire meeting. It's important that you leave investors with confidence in the CEO and CFO’s command of the business, which builds confidence in the future opportunities for the company.
Invest in your roadshow video
Creating a roadshow video is a critical and efficient way of conveying your message to the broad investor audience. It typically runs 30-35 minutes long and takes a lot of planning and perfecting to get right. It has to be consistent with SEC filings, meaning the legal, finance and investment banking teams should be partnering each step of the way.
Your video should include everything from the problem your product addresses and the market opportunity to your company financials and culture. The “test the waters” roadshow gave us a good starting point for our video script. Some companies opt to let their bankers do most of the scripting (and we certainly used their input to help refine our message), but we preferred to collaborate internally among those of us on the roadshow and our communications and marketing teams. After all, who knows the company better than the people who live it day in and day out?
Like the roadshow presentation, we practiced, iterated and practiced some more. We were making changes to our script just days before it had to be finalized, but we knew we had to get it right. In the end, we had more than 20 rounds of revisions. Why dedicate so much effort to the video? It’s your first impression—and may be your only one for the investors who aren’t able to attend group meetings or secure one-on-one slots.
Tune in to real-time feedback
Once the roadshow started, we loved getting real-time feedback from investors. Our bankers gave us access to an app we could refresh after each meeting to see what orders came in, giving us an immediate barometer of how well our presentation and/or Q&A landed. That insight into our conversion rate was effective feedback for us, as were our daily calls with our bankers, who would update us on what they were hearing from investors at the syndicate desk and help us understand how to address any lingering questions we could more effectively answer in the next meeting.
As an example, we received feedback that we could more effectively showcase our strengths in relation to our competitors, so we adjusted our talk track, practiced and were pleased to see that any remaining questions on competition largely dissipated. As we made adjustments, our effectiveness increased and our conversion momentum continued to grow.
Being open to feedback throughout the process is critical. Use it to improve.
Take it from those who’ve been there
It's worth acknowledging that staying energized for the full length of the roadshow can be daunting. We took full advantage of advice from one of our board members who had been through it before:
- Prioritize sleep and exercise.
- Grab food when you can, because you don’t know when you’ll get a break. Keep plenty of healthy snacks handy.
- Use the bathroom every chance you get. It might be a while before you find another one.
- Maintain a learner’s mindset. Be open to improvement and positive about change every single day.
- As I’ve said already, make every meeting better than the last one.
There’s a significant commitment required to make your IPO successful. Taking the time to prepare and bringing in additional resources to help refine your story, you can navigate the road with confidence, authenticity and grace.
Beyond the roadshow, there still a couple more things to get right, beginning with celebrating your successful launch.
Step 3: Creating a successful opening day
The hard work during the weeks and months leading up to your IPO all come together the moment your first trade happens on opening day.
It’s a day of celebration, anticipation and more interviews. Making sure the day goes off seamlessly takes deliberation, collaboration and detailed planning from dozens of people in your organization. You’ll want to make the IPO launch day a meaningful one for you, your team members, and the investors and partners who helped you get to this moment.
Be deliberate about who’s present
Going public usually happens only once in the history of a company, and bringing the right people along to celebrate in person will create a meaningful experience for everyone involved. Take a moment to think deeply about who you want to look around and see that day. There are limits to how many people you can bring, somewhat dependent on the exchange you select. It’s typically around 50-60. Space constraints for the bell-ringing ceremony and other areas of the stock exchange prevent you from inviting more than that. Your final list should include key people who helped make the day happen.
Of course, you’ll need the leadership team you toured with for the roadshow, and those who are well-versed in sharing the company story and fielding important financial, technical and operational questions, such as your finance and legal teams. Your communications and marketing leaders should be present to help navigate interviews with the press and cover the event on social media and other channels. The events team should be on hand to make sure every detail is covered from the swag to the toasts.
Beyond those key folks, choose people who you most want to recognize that day. Reflect on who helped you make the company what it is—early team members or partners who’ve been there since your days as a nimble startup, private investors or board members who helped you get started, or family members who supported from the home front.
May 1, 2018 was the big day for us at Pluralsight. With me were some of the earliest Pluralsight team members, private investors and course authors, our leadership team, board members, Pluralsight co-founder Fritz Onion and his family plus my wife and children. I can’t imagine a better set of people to have celebrated this important moment for our company with—those who believed in our vision and mission from the beginning and were instrumental in getting us to this incredible moment. Having them present made the day feel even more significant for all of us.
Make team members back home feel included
It’s just as important that team members back at the office feel like they’re a part of the celebration. On the day of the IPO, hold a party at each office if possible, and live stream as much of the events happening at the stock exchange as you can.
Take a moment to share remarks with team members who aren’t there in person, so they can take part in the excitement you’re feeling during the bell ringing, the signing of the stock certificate, and the moment your stock goes live. Have members of the stock exchange team narrate key events taking place and encourage your executives and other team members in New York to speak with everyone back home during downtime.
If you have remote team members or family members who can’t make the celebration in New York, make sure to include them as well, giving them access to the live stream and sending any special swag or treats to them ahead of time.
In addition to the above, we did a few other things to make the celebration memorable for us. We thought it would be fun to bring a bit of the New York City atmosphere to the teams, so we decorated our Utah, Boston and Dublin offices with art representing the New York skyline. We also handed out I <3 PS (our stock ticker) t-shirts during breakfast.
To add meaning to the moment, we gave each employee an individualized and symbolic piece of art designed by our creative director. The piece represented our product, mission and values and was customized to include the employee’s name and number on it.
Adding a meaningful gift gives team members an extra reminder that they were present for one of the company’s most shining moments.
Leading the day
Making the occasion special for the many team members, investors and families who put their faith in your company takes some preparation. You’ll work with your leadership team to prepare the many assets you’ll need with you ahead of time. That includes press releases, a founder’s letter and talking points for media, among other documents. We hosted a special dinner the night before the IPO for everyone in New York, and it was important to me to be prepared with notes and remarks for that celebration, as well as for the bell-ringing ceremony and other moments throughout the day.
On the day of the launch, allow time for press interviews that will begin in earnest after the first trade. You’ll likely speak both press that are familiar with your company and press that cover IPOs and don’t know your business at all. I recommend allocating a few time slots for any press that have covered you since the early days. If you’re not in Silicon Valley or New York, it’s also good to include some of your hometown newspapers and TV news stations.
For your interviews, be prepared to boil down your 30-minute roadshow presentation to 10-15 minutes. For me, that meant turning 14 years of work into 14 minutes. It was challenging, but in the end, proved valuable because we were able to tell folks what we do and why it’s important in a sentence or two. We did 13 press interviews after the first trade, and while I was tired at the end of the day, I’m glad I took advantage of the opportunity to raise our brand awareness. After all, that was our “why” to begin with.
There’s also an important shift in your perspective that needs to take place before speaking with the press. You’ve been spending so much time talking to investors, but you have to pivot and speak to press as if you’re speaking to a potential customer.
Returning to a new normal
The extraordinary feeling that permeates your first day as a public company will quickly—and necessarily—give way to business as usual. As CEO, if you’re not prepared for this reality, you risk feeling let down after the exhilarating day is over. But you can avoid this trap. Recognize that the IPO is just the next chapter in your company’s exciting story.
More importantly, help your team members prepare for this shift. They will no doubt feel energized and excited as a new era begins. They’ll have a lot of questions. They’ll probably feel a bit of uncertainty about how things will change.
In this moment, being deliberate about what comes next will be useful for everyone.
Consider holding a company-wide town hall the next day, or as soon after the IPO launch as possible given travel schedules. A lot of teams choose to spend the weekend in New York to revel in the moment, but we didn’t want to wait that long to be with our broader team. You’ll have plenty of time to decompress and mark the occasion in the days that follow, but you really only have one opportunity to make this milestone meaningful for everyone back home.
That’s why we chose to fly back the day of the IPO—even taking press interviews on the way to the airport—so we could make it back in time for a town hall the next morning. We wanted to share the experience with the team while it was still raw and give them the opportunity to ask questions about the IPO process.
If you host a similar meeting, make sure all the company leaders who participated in the roadshow are available to talk about what that experience was like, and what they learned along the way that made for a successful launch.
If they’ve participated in IPOs for other companies, have your leadership team describe what happens in the days and weeks following to help the future appear a little sharper to team members.
If you have an employee stock-purchase plan or other communications that needed to wait until after the IPO, share important details and answer any remaining questions about it, since it now has a more clear meaning for team members.
End the meeting with this important call-to-action: Moving forward, it’s business as usual.
Step 4: Getting back to business
Getting back to business after being maniacally focused for months on our IPO reminded me how much I love what Pluralsight does and the team members that bring it to life every day.
As leaders and employees dive into this new normal, there are a few considerations that can help in the transition from a private to a public company.
First, it’s helpful to take some time to reflect on how it all went. It’s a time for gratitude for what the team accomplished and the employees and advisors that helped make it happen. If there is someone who was critical to making the IPO a success, thank them.
Ask yourselves some key questions:
- What went well?
- Who deserves recognition for their contribution?
- What’s important moving forward?
For us, as we looked back in the days after our launch, we realized how important having an experienced team with deep understanding of public markets was in making our effort successful.
We also better appreciated how critical our performance during the Q&A sessions was to our success. As I covered in the Preparing your company story section, when it comes to Q&A sessions with investors during the roadshow, it’s absolutely crucial to answer every question that comes your way. Even if the answer occasionally might be that you don’t know, and that you need to research and double back with them, you need to give every question a response. If you do need to double back with an answer, do so quickly. The ability to respond quickly and confidently provides an invaluable opportunity to instill confidence in your company and demonstrate command of the business, which in turn helps create and increase value. The tie between confidence in the business and value can’t be understated.
Finally, and above all else, we were affirmed in our belief that, in the end, opening day is just another day. As important a moment as it is, going public is just another milestone in the lifetime of a company. It’s significant, but not the end of the road.
Thinking about it this way makes it easier to stay focused on what really matters—your mission and growing the business to support that mission as you begin operating as a public company. Quarterly earnings calls, SEC filings, talking with new and potential investors, and working with sell-side analysts are just a few of the new activities that are now a part of your life as CEO.
Remember your community
Reflecting on the impact of your IPO on your local community is also important, especially if you live in a region that’s in the process of building a strong business ecosystem and attracting top talent from around the world.
Get involved in your community to further strengthen the local economy and image. This effort is important because it has the potential to drive meaningful return for your company, in addition to creating positive impact for your city.
Salt Lake City, where Pluralsight is headquartered, is gaining recognition as a great place for tech companies. That’s one of the reasons I co-founded Silicon Slopes, a tight-knit community of Utah’s startup and tech companies. On IPO day, we felt even more buoyed and energized because we were supported by the positive energy and sense of pride that comes from a strong community—that our success was also our community’s success. And in many ways, our IPO validated what Silicon Slopes has been creating in Utah. It gave further credibility to the idea that people can start and grow businesses here that evolve into globally recognized and respected public companies.
Reintegrate with the business
Once you’ve taken some time to reflect, the next step is reintegrating yourself into the business.
The IPO takes so much time and energy, but quickly getting up to speed on what’s been going on back at headquarters (and with your teams around the world) is important. It was fun for me to get back to my daily routine, attend meetings that drive operational excellence and spend time with folks around the company learning about their ideas to improve our performance.
Getting back to your routine, focusing on what really matters, and taking time to make sure team members who didn’t directly participate in the IPO feel recognized and valued is a must-do post IPO. Now’s the time to keep a laser focus on anything that drives both short and long-term success for the company.
Refocus on your mission and vision
After your IPO, your commitment to your mission should continue. Keep running the business and meeting the goals that you and your leadership team previously established. Whether that’s driving operational excellence, expanding market opportunities to increase the sales pipeline, expanding your product offerings or something else—keep doing what you’ve been doing to build upon your success.
You shared your mission with a number of people—investors, press and the like—during the pre-IPO roadshow. Let their support and belief in your mission strengthen your commitment to it and energize you as you turn to your new audience.
For us, going public was one more step in laying the foundation for the important work we’re doing to change the world by democratizing technology skills.
Reconnect with your loved ones
When it’s all said and done, I recommend scheduling time off to disconnect from your IPO experience and reconnect with those who energize you. Take a break and really let go, if only for a day or two. You’ll come back recharged, rejuvenated and ready to begin your next adventure.
5 keys to successful organizational design
How do you create an organization that is nimble, flexible and takes a fresh view of team structure? These are the keys to creating and maintaining a successful business that will last the test of time.Read more
Why your best tech talent quits
Your best developers and IT pros receive recruiting offers in their InMail and inboxes daily. Because the competition for the top tech talent is so fierce, how do you keep your best employees in house?Read more
Technology in 2025: Prepare your workforce
The key to surviving this new industrial revolution is leading it. That requires two key elements of agile businesses: awareness of disruptive technology and a plan to develop talent that can make the most of it.Read more