IPOs are a crucial element in the tech ecosystem. They provide access to capital, liquidity for investors, and an avenue for increasing brand value. A successful public offering is an important milestone for every tech entrepreneur.
So, it’s no surprise that this week’s panel at NYC Tech Week, IPO journey in the era of AI, attracted a lively and engaged audience, eager for insights. I had the pleasure of participating in the discussion, which was sponsored by PwC and moderated by PwC partner Christina White.
A major focus of the panel was investigating how businesses can use AI to prepare for an IPO. The companies we work with are using AI for forecasting and scenario modeling, helping them stress-test business plans and refine valuation models. They are also using AI-driven data rooms and analytics to streamline document review, flag inconsistencies, and surface risks early.
But that’s not all. AI tools are helping companies identify potential investors as well as craft differentiated equity stories that resonate with institutional investors.
And more innovation is on the way. In fact, DFIN is incorporating AI into our ActiveDisclosure financial reporting software to improve productivity and provide companies with visibility across their industry and peer group as they prepare for an IPO.
Keep in mind, companies will want to promote the responsible use of AI. They must be ready for rigorous due diligence around AI assets. This includes governance, data quality, and ethical use. As diligence now extends beyond financials to include how AI is integrated and maintained, companies must demonstrate thoughtful approaches that place high value on security and accountability.
Moreover, they should resist the temptation to use AI as a replacement for their own expertise or that of their stakeholders. Executives should embrace AI as part of the IPO journey by leveraging it to augment their research and positioning.
Beyond the exit, companies should be looking for ways to integrate AI for the long term. This is especially relevant as we are hearing from banks that valuations are getting back to 2021 levels for companies that have a clear AI strategy.
IPO or M&A? Be Ready for Either
Another topic the panel addressed was alternatives to an IPO. Remember, a public offering isn’t the only game in town. Given today’s fluid market environment, companies may want to plan simultaneously for an IPO and an acquisition to ensure flexibility and reduce execution risk. Pursuing such a “dual track strategy” means acting like a public company every day.
To start, companies must prepare their documents using a virtual data room, such as DFIN’s Venue, which empowers teams to easily manage and share files in a secure and cost effective environment to protect privacy and streamline projects.
Companies must hire for key roles that will be needed after going public, which may include jobs in accounting, legal, financial planning and analysis, and internal audit and compliance.
They must assemble a knowledgeable board of directors that can add value by bringing useful skills and insights to bear and working constructively with each other and management.
They must define the business’s unique equity story and stick to it. The story should answer several questions: Why will anyone want to invest in the company? What is the competitive differentiation, the moat? What does the company’s previous growth look like? What does the future hold? Remember, AI can’t create this narrative, but it can help to refine and sharpen it.
Other requirements include:
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Maintaining due diligence and leveraging AI to provide insights into areas of the company that may require attention or draw concern from investors. For example, conducting vendor due diligence early will help anticipate buyer concerns and streamline the process.
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Managing financial reporting with the same cadence of a public company so the transition is seamless when the time is right.
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Preparing for M&A diligence with a Virtual Data Room (VDR), as most IPOs are dual track. VDRs provide centralized, secure, and well-organized documentation that accelerates review where acquirers demand audit-quality financials and operational transparency.
When leaders have a deep understanding of the market as well as their own company, they will be able to reap benefits long after a liquidity event. Embracing technology, especially AI, will help them sort out the useful solutions from the tech fads that don’t provide a competitive advantage.
The goal, as one panelist noted, is not to be “an orange in a bowl of apples, you want to be a shiny apple in a bowl of apples.”
Thanks to PwC for the opportunity as well as to Christina White and my distinguished fellow panelists: Jeremy Budzian, Romit Dey, Ryo Kuroki, and Cullen Lee.
