The Most Common Mistakes Made When Preparing a Private Company for Public Markets or Strategic Sale

Pursuing an Initial Public Offering (IPO) or a strategic acquisition marks a pivotal milestone in a private company’s lifecycle. When executed properly, these transactions can unlock substantial capital and provide meaningful liquidity for founders and early investors alike.

While the rewards can be substantial, the risks are equally consequential. Any missteps in the preparation process can lead to valuation shortfalls, regulatory delays, or failed deals, costing your company time and credibility.

So, what are the most common mistakes companies make during the preparatory stages? And how can you avoid these pitfalls during your IPO or strategic sale?

Below, we’ll break down the most common mistakes business leaders make, along with some practical solutions for sidestepping these issues. We’ll also explain how working with an experienced advisory partner, such as Alden Investment Group, can help ensure the success of your deal.

IPO vs. Strategic Sale: What’s the Difference?

Before diving into the common mistakes companies make, let’s briefly review the key differences between these two exit strategies:

• The IPO process enables you to offer shares of your company to the public on stock exchanges. This strategy can offer access to ample capital, which you can use to fuel growth, invest in infrastructure, repay debt, or pursue strategic initiatives. However, it also introduces ongoing regulatory requirements, heightened investor scrutiny, and the constant pressure to meet quarterly performance expectations.
• A strategic sale, on the other hand, involves selling your company to another business, often within the same or a closely related industry. While this path can provide a faster exit with fewer regulatory obstacles than an IPO, it also presents added complexities, including ensuring proper cultural alignment and post-deal integration.

Read More: What Institutions Need to Know Before Starting the Merger and Acquisition Process

7 Mistakes That Can Derail Your IPO or Strategic Sale

No matter which exit plan you choose, you can increase your chances of success by proactively avoiding these seven mistakes:

#1 Waiting Too Long to Start the Process

One of the most frequent and costly mistakes private companies make is underestimating the time and effort required to prepare for a public offering or strategic sale. Too often, companies delay the process until they’re:

• Facing pressure from investors
• Grappling with market volatility
• Experiencing founder fatigue

Under these circumstances, you’re more likely to make rushed decisions. A tight IPO process timeline can strain your internal team, diverting their focus from your company’s core operations and weakening the very performance metrics you’re trying to showcase to public investors or potential buyers.

Solution: Give Yourself Plenty of Lead Time

Successfully preparing for an IPO or strategic sale doesn’t happen overnight. To avoid costly missteps, start laying the groundwork at least 18 to 36 months in advance. This gives you sufficient time to:

• Assemble the right advisory team
• Conduct a thorough financial audit
• Identify and close any reporting or compliance gaps
• Evaluate your regulatory readiness and governance structures
• Align your leadership team around a long-term strategy
• Complete any necessary organizational or operational restructuring

By allocating ample time for these tasks, you can avoid last-minute surprises, position your deal for maximum value, and engage potential buyers or investors from a position of strength.

#2 Inadequate or Inconsistent Financial Reporting

Another common stumbling block for companies going public or seeking a strategic sale is insufficient financial reporting. Many private firms still use cash-based accounting or rely on error-prone manual spreadsheets. These practices simply won’t hold up under investor scrutiny.

Instead, today’s investors and strategic buyers expect you to follow Generally Accepted Accounting Principles (GAAP) standards, which require you to use:

• Accrual-based accounting, which recognizes revenue and expenses when they are earned or incurred, as opposed to when cash changes hands.
• Consistent revenue recognition, which applies reliable methods for recording revenue, so your numbers are easy to compare from one period to the next.
• Detailed disclosures and audit trails that validate your financial statements and facilitate thorough due diligence.

Solution: Upgrade Your Financial Practices in Advance

If you want to attract serious investors or acquirers, your financial reporting must meet institutional standards well before you go to market. Thus, you should begin implementing these practices as soon as possible:

• Closing your books on a monthly cadence
• Building board-quality reporting packages
• Transitioning to accrual-based accounting that complies with GAAP
• Preparing multi-year forecasts
• Tracking key performance metrics
• Maintaining detailed audit trails

If your current finance team doesn’t have public market experience, consider bringing in outside support. At Alden Investment Group, we can connect you with experienced advisors who can enhance your reporting systems and provide stakeholders with the transparency they expect.

#3 Overlooking the Importance of Corporate Governance

Strong corporate governance is just as crucial as solid financials. Investors and acquirers want to feel confident that your company has clear decision-making processes, effective risk management, and a plan for leadership continuity.

Many private companies rely on informal, founder-centric governance models. While these models may work initially, they can become a significant liability during the exit process. You may be at a greater risk of investor skepticism, regulatory scrutiny, and operational risks if your company lacks the following:

• A formal board of directors
• Documented board committees and responsibilities
• Comprehensive succession plans
• Robust leadership development programs
• Clear documentation of bylaws, voting procedures, and compliance

Read More: The Importance of Succession Planning

Solution: Adopt Public-Grade Governance

To enhance investor confidence and mitigate risk, implement a governance structure that meets public company expectations from the outset. Depending on your starting point, this may involve:

• Establishing an independent board that features both internal leaders and outside experts.
• Creating key board committees (audit, compensation, governance, etc.) with clear charters and regular meetings.
• Formalizing your company policies regarding insider trading, conflicts of interest, executive compensation, whistleblower protections, and cybersecurity.
• Developing documented succession plans for critical leadership roles.
• Ensuring all governance documents (bylaws, shareholder agreements, voting rights) are legally sound and investor-ready.

At Alden Investment Group, we can help your company elevate its governance practices. Whether you’re looking to assemble your first independent board, develop investor-ready policies, or create succession plans for key executives, our advisory team can guide you through the process step by step.

Read More: 6 Steps to Effective Succession Planning for Financial Advisors

#4 Overlooking Your Regulatory Readiness

Going public with your company requires you to navigate a complex regulatory landscape. Once you go public, you’ll face a whole new level of scrutiny and rules, including:

• Securities and Exchange Commission (SEC) reporting requirements – You’ll need to file quarterly and annual reports, earnings announcements, and other disclosures with the SEC.
• Sarbanes-Oxley (SOX) compliance – The SOX Act requires you to maintain strong internal controls over your financial reporting. Your management team must regularly confirm their effectiveness, or you may face fines and loss of trust with auditors.
• Investor relations expectations – As a public company, you must communicate regularly with your shareholders and analysts and adhere to fair disclosure rules.
• Insider trading and governance policies – Finally, you must adhere to clear rules regarding when insiders can trade stock and how to handle confidential information and conflicts of interest.

Unfortunately, many private companies underestimate the demands and resource intensity of this regulatory transition. Poor preparation can lead to costly delays, regulatory missteps, or even reputational damage, potentially derailing your IPO before it gains traction.

Solution: Start Establishing Your Regulatory Compliance Early On

Regulatory compliance isn’t something to rush—it takes significant time and expertise to get right. Therefore, you should begin your preparations at least 12 to 18 months before your planned IPO.

Start by strengthening your internal controls, formalizing your governance and disclosure policies, and assembling a legal and compliance team that’s well-versed in public companies’ obligations. Next, familiarize yourself with your required SEC filings and investor communications to avoid surprises once you become public.

At Alden Investment Group, we can help you navigate this complex process, ensuring you have the systems and support you need to meet regulatory demands and earn investors’ trust.

#5 Overestimating Your Business Valuation

After pouring your heart into building a private company from the ground up, it’s natural to assume that it’s worth a premium. Many business owners base their expectations on competitors’ rumored sale prices or overly optimistic internal projections, rather than objective market data.

Unfortunately, these assumptions may not reflect actual investor sentiment or industry benchmarks. Without a data-driven view of your company’s worth, you risk mispricing your business and derailing negotiations.

Solution: Get a Reality-Based Valuation Before Going to Market

To prevent emotional pricing or wishful thinking from derailing your deals, obtain a market-based valuation from a qualified financial advisor. At Alden Investment Group, we can help you understand your company’s true market value using the following methodologies:

• Discounted cash flow (DCF), which determines your business’s value by projecting future cash flows and discounting them according to your company’s risk profile.
• Comparable company analysis, which benchmarks your business against other publicly traded companies in your sector.
• Precedent transactions, which analyze real-world M&A deals that involve companies with similar size, industry, and business model to yours, to determine what buyers have paid in the past.

Along with delivering an objective valuation, we can suggest ways to enhance your company’s value and assist you in negotiating the best possible terms for your deal.

#6 Ignoring Post-Transaction Integration

In the excitement of closing a strategic sale, many private companies fail to plan for what happens next. However, a signed deal is only half the journey—the real value is realized (or lost) in the integration phase.

Some common integration issues include:

• Cultural mismatches – Differences in company values, management styles, or workplace norms can create tension among teams. These cultural clashes can slow decision-making, hinder collaboration, and undermine employee morale.
• System or process incompatibility – Merging different software systems or compliance workflows without a clear roadmap can cause massive disruptions to your post-close company’s daily operations.
• Lack of talent retention planning – If key employees don’t understand their future or feel left behind, they may jump ship, taking institutional knowledge and customer relationships with them.
• Communication breakdowns – Unclear messaging around what’s changing can lead to fear, confusion, or resistance among both internal teams and external stakeholders.

These integration challenges are a big reason why the majority (70% to 90%) of strategic acquisitions fail to deliver on their projected synergies.

Solution: Make Integration a Pre-Closing Priority

Ideally, you should start integration planning months before a deal is signed. Consider these questions throughout the process:

• How will your companies’ operations, systems, and teams be combined?
• What changes will affect customers and partners?
• Who will stay and who will go?
• What is the communication plan for employees and stakeholders?

At Alden Investment Group, we understand that closing a deal is just the beginning. Our team works closely with clients before, during, and after acquisitions to ensure smooth integration and sustainable success.

Whether you need help building a communication plan, retaining top performers, or merging operational systems, our advisors can provide hands-on support at every stage.

#7 Going It Alone

The final and most critical mistake? Trying to navigate the entire IPO or sale process without professional support.

While many entrepreneurs pride themselves on their independence, preparing for these types of transactions is not a DIY endeavor. Without the right partners, you risk:

• Overlooking red flags
• Leaving value on the table
• Misjudging buyer intent
• Failing to anticipate market dynamics
• Being unprepared for the public market’s scrutiny

Solution: Build a Trusted Advisory Team

Assembling a team of experienced financial advisors, legal experts, and audit and tax professionals is the most impactful step you can take to ensure a successful IPO or strategic sale.

At Alden Investment Group, we specialize in helping private companies plan and execute successful transitions, whether that’s a public market debut, growth equity raise, or strategic acquisition. Our institutional advisory services include:

• Capital markets advisory services
• M&A services
• Valuation and financial strategy
• Governance and board readiness
• Post-transaction integration support

By working with a trusted advisory team, you can position your company to smoothly navigate challenges and seize opportunities throughout the transaction process.

Read More: Capital-Raising Strategies for Credit Unions and Community Banks in 2025’s Economy

Pursue a Seamless IPO or Strategic Sale With Alden Investment Group

Preparing your private company for the public markets or a strategic sale is a high-stakes undertaking. As a result, it requires careful planning, smart positioning, and expert execution.

By avoiding these seven common mistakes and enlisting the right expertise, you can maximize your company’s value and pursue your preferred transaction with clarity and confidence.

Whether you’re months away or just beginning to explore your options, Alden Investment Group is here to help you make your next move. Reach out to our team today to learn more!

Sources:

Forbes. The Importance Of Preparing For IPOs Early.
https://www.forbes.com/councils/forbesfinancecouncil/2021/12/15/the-importance-of-preparing-for-ipos-early/

Investopedia. Generally Accepted Accounting Principles (GAAP): Definition and Rules.
https://www.investopedia.com/terms/g/gaap.asp

Investopedia. What Is the Securities Exchange Act of 1934? Reach and History.
https://www.investopedia.com/terms/s/seact1934.asp

Congress.gov. H.R.3763 – Sarbanes-Oxley Act of 2002.
https://www.congress.gov/bill/107th-congress/house-bill/3763

Harvard Business Review. Don’t Make This Common M&A Mistake.
https://hbr.org/2020/03/dont-make-this-common-ma-mistake