Going public is one of the major milestones in the life cycle of a company. It gives the company its biggest boost in capital raising and also visibility, credibility, and valuation in the market. And at the center of this whole exercise are investment banks-strategists, advisors, underwriters, and gatekeepers to the public markets.

With the prior understanding of how investment banks provide assistance to companies in their IPO, it provides a clear insight of precision-planning-pressure defining the IPO journey.

Step 1: Planning and Feasibility Analysis
A company should consider looking for public opportunities if it has already proven to be IPO-ready, which involves auditing its financials, business model, compliance with regulations, and corporate governance. At this initial stage in the process, the investment banks would conduct due diligence because they need to assess and give honest feedback about the readiness of the company in developing structures and operations toward satisfying public market standards.

Step 2: Choosing the Right Investment Bank
Choosing the right bank is not enough for a company. It is generally searching for banks strong in terms of industry exposure, a complete investor network, and track record. Some hire one or series of banks for different purposes, usually naming one as the lead underwriter or “bookrunner.” These banks, therefore, act more than financial advisors; they are now the face of the IPO, acting as a liaison between the company and the investing public.

Step 3: Preparation of Due Diligence and Regulatory Filings:
Thus, once a suitable investment bank is hired, it initiates the due diligence process, working with legal and accounting teams on the needed documentation, especially the Draft Red Herring prospectus (DRHP). This includes detailed and sensitive information regarding the company’s finances, operations, risks, and how the proceeds from the IPO will be used.

This phase registers the bank and the company with the market regulator, such as SEBI in case of India or the SEC in the United States. The investment bank helps craft a compelling narrative that relays both the very promising growth story of the company to the regulators as well as to the investors. The investment bank helps craft a compelling narrative that communicates the company’s growth story to regulators and investors alike. This phase also involves registering with the market regulator (like SEBI in India or the SEC in the U.S.).

Step 4: Valuation & Price Discovery The most critical stage within the IPO process is valuation. Investment banks rely on a variety of models- discounted cashflow (DCF), comparable analysis, and precedent transactions arrive at their investments’ fair value. Ultimately, though, the final price of the IPO is based on pure appetite from investors and, to a certain extent, market sentiment.

Instead of a fixed price, banks would offer a price band. This allows them to establish the level of demand while maximizing the capital that can be raised. Given the volatility and skeptical attitude of investors towards previous unicorns post-listing performances, pricing has become even more critical in light of recent IPOs like those of Ola Electric and Swiggy eyeing the public markets.

Step 5: Marketing the IPO

The Roadshow Upon DRHP filing and approval, the investment bank organizes a “roadshow.” It consists of a series of presentations to potential institutional investors, where the company’s management pitches its business plan and growth vision. The goal? Create buzz, trust, and confidence.

In the current digital era, roadshows have also gone digital. Virtual meetings accompany the traditional in-person local road shows, expanding to a global audience. This shift was further accentuated post-pandemic to enable companies to access a broader investor base.

Step 6: Book Building andAllocation
The gauging of investor demand brings in the book-building stage. This phase of the bidding process is what takes place with bids made by investors within the defined price band. The issue price is fixed then by the bank based on demand and distribution of shares among institutional and retail investors and high-net-worth individuals (HNIs).

Interestingly, the latest IPOs like Mamaearth and IdeaForge have seen huge domestic retail participation but lukewarm interest from institutions, underscoring how the segments can vary widely in sentiment toward investors.

Step 7: Listing and Post-IPO Stabilization After allocation of shares, the company gets listed on the stock exchange. The bank, however, has some more work to do, since in the days following the listing, investment banks will be monitoring trading activities and may need to intervene using some pre-agreed mechanisms like greenshoe options to stabilize the stock price.

It also provides analyst coverage and guidance post-listing, helping the company come to terms with its new life as a public entity and face obligations regarding investor relations, earnings reports, and regulatory disclosures.

Conclusion:

IPOs Are High-Stakes, High-Reward Marathons. Both strategy and execution, IPOs touch on the whole cycle of deep financial acumen, as well as strategic foresight are the core skills that investment banks are in a position to offer. Their role is not just taking a company public but making sure it remains attractive, stable, and successful in the public market.

In recent years, the rise of tech startups and the push for liquidity events have made IPOs more relevant than ever. With a growing number of Indian firms entering global markets, the demand for financial experts has surged. Many aspiring professionals are now exploring pathways like an investment banking course online in India to break into this dynamic field and play a part in the IPO boom.