For companies considering an IPO, relationships with investment bankers should often begin well before the company formally mandates its IPO syndicate. Early banker relationships can provide valuable market perspective while there is still time to act on it — helping companies understand how public investors may view the business, pressure-test the equity story and identify issues that may matter when an IPO becomes more immediate. As the IPO becomes more concrete, the relationship should evolve from market intelligence and relationship-building toward positioning, syndicate selection and execution. The takeaway: engage with bankers early; formally mandate them later when the company is ready to pursue an IPO.
The Stages of Banker Engagement
Companies often think about engaging bankers as a discrete step in the IPO process—running a “bake-off”, selecting the syndicate and moving toward an organizational meeting. But, the most productive banker relationships often begin much earlier. The purpose of those relationships, however, should change as the company moves closer to a potential IPO.
Relationship-Building (as early as 24–36 months out)
For many high-growth companies, banker relationships begin years before a potential IPO. At this stage, there is no mandate to award and no syndicate to construct. The objective is to develop relationships with a thoughtful group of bankers and to leverage their perspective to understand how the public markets are likely to view the company.
Bankers can be a valuable source of market intelligence during the pre-mandate period. They can provide periodic market and valuation perspectives, invite management to industry conferences, make introductions to potential investors and help management understand how the public markets are likely to frame the business. These interactions also give bankers an opportunity to develop their understanding of the company well before they are competing for a formal role. Just as importantly, the company can use this period to assess various banks over a long horizon, rather than solely in the compressed setting of a formal pitch process.
This early dialogue can be particularly useful because the feedback comes while there is still time to act on it. Bankers may identify a disconnect between the companies that management views as peers and the comparables public investors are likely to use, a KPI that investors will expect but the company does not yet track rigorously or an aspect of the business model that may require additional explanation or proof. Receiving this feedback early is important because some issues require time, not simply better messaging. For example, it requires time to build the systems that produce key metrics reliably, quarter after quarter, such that at the IPO the company can present multiple years of history against the very measures investors will use to value it. More broadly, early feedback can help management identify a weakness in the equity story—or in the business itself—while management still has time to address it. The goal is not to let bankers author the company’s strategy or equity story, but to use their perspectives to distinguish a messaging issue from a business issue early enough to address either. Companies should also develop relationships across several banks: each bank’s perspective naturally reflects its own franchise, coverage and views of the market, and triangulating among them can provide better intelligence than relying on any single relationship.
Testing the Story (roughly 12–24 months out)
As an IPO becomes a more realistic near- or medium-term objective, banker interactions should become purposeful and market-facing. Bankers can help companies deepen relationships with research analysts and begin appropriate investor education, including through bank-sponsored conferences, non-deal meetings and, where relevant, late-stage or crossover financings. This engagement is best intensified once a company has genuine visibility into a potential IPO horizon, rather than merely the aspiration to go public. The objective is not simply earlier or greater exposure, but appropriately timed engagement once the company is ready to benefit from—and make a strong first impression in—those interactions.
One of the most consequential relationships is with research analysts. The investment banking team’s role is concentrated in the offering itself; the research analysts who cover the company will remain part of its public-market life for years afterward—publishing estimates, framing quarterly results and interpreting the company’s strategy and performance for institutional investors. Their sector standing and understanding of the company can meaningfully influence how the company is understood in the public markets following the IPO. Prior to mandating the banks, conversations with research analysts can be genuinely two-way, including by analysts sharing perspectives on the sector. Once banks are formally mandated and an offering process is underway, analyst-independence rules effectively make these interactions one-directional. Nevertheless, even in the pre-mandate period, these conversations should be structured with care and should not extend to valuation or to any bank’s pursuit of an underwriting role, both to preserve analyst independence and to avoid complicating the process later.
In addition, bankers can help build investor familiarity before a formal IPO process begins. Once the process is underway, investor communications become significantly more regulated—and as a practical matter, the quiet-period and “gun-jumping” constraints of the federal securities laws generally begin to attach around the time underwriters are formally mandated, well before any public filing—and investor education is compressed into a limited series of interactions, including testing-the-waters meetings and the roadshow. Investors who already understand the company, its business model and the key drivers of its financial performance are better positioned to use those interactions to evaluate the equity story and valuation, rather than learning the business for the first time. Bank-sponsored conferences, organized investor meetings and other appropriate investor-education opportunities allow management to build that familiarity while also giving management an earlier view into the questions public investors actually ask before formal testing-the-waters meetings and the roadshow.
Earlier engagement, however, should not be confused with casual engagement. A premature meeting can be counterproductive: first impressions can be difficult to reverse, and investors and analysts do not simply forget information or expectations communicated in earlier interactions. Companies should think about consistency across private financing materials, investor communications, testing-the-waters materials and ultimately the registration statement, rather than treating each interaction as a standalone conversation. Information shared in private financings or other pre-IPO interactions can also create legal and practical issues later in the process—for example, projections or other material nonpublic information provided to an investor can complicate that investor's participation in a subsequent IPO if the information remains material nonpublic information. These interactions also consume management attention that may be better spent building the business if an IPO remains too remote. Early outreach should therefore be deliberate, appropriately structured and coordinated with securities counsel.
The Mandate and IPO Execution (roughly 8–12 months out)
The formal mandate marks the transition from pre-IPO engagement to execution of the IPO itself. As an IPO becomes an execution priority, companies typically conduct a competitive “bake-off” and formally mandate their lead bookrunners. The organizational meeting then kicks off the IPO-specific workstreams, including preparation of the registration statement, valuation and positioning, testing-the-waters and investor education, analyst preparation, roadshow planning and, ultimately, pricing, allocation and distribution.
From that point, the banks become part of the core working group and are actively involved in the IPO-specific workstreams. They are closely involved in drafting the registration statement—particularly the business and marketing sections that carry the equity story—and in translating that story into the framework investors will use to evaluate the offering. They lead investor education: identifying the institutions best positioned to anchor the order book, arranging testing-the-waters meetings, and synthesizing investor feedback into refinements of positioning and, ultimately, valuation. And they drive the offering's rhythm—advising on when to convert the confidential submission to a public filing, when to launch the roadshow against the market backdrop and the competing IPO calendar, and how to sequence analyst preparation alongside the offering itself. As a result, banks are typically one of the first groups of advisors formally engaged for an IPO process.
Bank selection should reflect more than proposed valuation or league-table position. Companies should consider the strength and availability of the specific team that will staff the transaction, relevant sector experience, distribution capabilities and—importantly—the research analysts. Syndicate size and composition should also be deliberate. A broader syndicate can expand distribution and prospective research coverage, but additional banks add coordination and dilute economics and attention across the group. Companies typically select the lead bookrunners at the mandate and add other bookrunners and co-managers later, allowing the core working group to remain relatively small during the early stages of execution.
