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What to Know About Going Public Through an IPO, SPAC, or Direct Listing

Posted on May 6th, 2021. Posted by

Going Public: IPO, SPAC, or Direct Listing?

Going public is a transformational event that gives companies the capital they need to invest in future growth, attract top talent, and raise their profile, while providing liquidity to investors and employees.

Today, there are several ways to take your company public, whether you choose to pursue a traditional initial public offering (IPO) or opt for a less common path, such as a special purpose acquisition company (SPAC) transaction or direct listing — two paths that have become increasingly prevalent. In fact, in 2020, 248 companies went public via SPAC transactions. And several notable companies, including Spotify and Slack, went public via direct listings.

However, while each path ultimately leads to the public markets, they each come with complex and evolving requirements. To successfully execute the transaction, management teams and financial sponsors need to prepare thoroughly and know what to expect. Executives and owners must consider capital and liquidity needs, valuation expectations, public perception, ESG metrics, and more.

Whichever path you choose — IPO, SPAC, or direct listing — you will need to formulate precise capital markets, investor relations, and public relations strategies to make your journey to the public markets a success. Here’s what you need to know about each potential path.


The most common and traditional way to enter the public markets, an initial public offering (IPO) offers many benefits. Companies that pursue IPOs are well supported by a comprehensive team of experts, including:

  • An investment bank underwriting team oversees the overall transaction and supports it through sales, marketing, and analyst coverage. Bankers serve as the main advisors in planning and timing the IPO, as well as organizing the road show and setting valuation.
  • Communications professionals help craft effective investor relations and public relations communications strategies, which drive awareness ahead of the offering. This team may also conduct test-the-waters meetings, build relationships with key analysts and investors, and position the company for success once the deal closes.
  • A capital markets advisor provides independent and objective advice throughout the IPO process regarding topics such as investment banker selection, research analysts, investor targeting, and more.

However, it’s also important to keep in mind that the IPO process can be long — typically longer than other options — and forces outside of the company’s control can create uncertainty and impact the ultimate valuation.


Special purpose acquisition companies (SPACs) are formed solely for the purpose of raising capital through an IPO, and then acquiring a private company, making it public in the process. Because the private company is made public through a merger, the communications requirements and limitations are different than those surrounding a traditional IPO. In general, companies can market more vigorously, provide forward-looking projections, and actively tell their story to investors and the media.

This is appealing to investors because they get more visibility into the transaction and a greater opportunity to interact with management while the company seeks shareholder approval. Target companies also benefit, as SPACs offer advantages over traditional IPOs, like more price certainty.

Of course, SPAC transactions have trade-offs as well. SPACs don’t have the support of an underwriting bank, which means they lack the sales support and client network that those bankers typically provide. SPACs also don’t typically attract the same level of near-term analyst coverage as IPOs, so they can be more dilutive to existing shareholders.

Because SPAC transactions can be marketed more actively, however, they do require the support of a communications team. IR and PR professionals can help companies craft their message, target retail and institutional investors, and execute a marketing campaign following the initial deal announcement.

Direct Listing

Direct listings are less common than IPOs or SPACs, but have gained some recent traction, especially as well-known companies such as Spotify and Slack have pursued this option. Companies that choose this path to go public list their shares on a public stock without underwriters.

After the company files a registration statement with the SEC, they may conduct test-the-waters meetings. Then, after a quiet period, they can hold investor road show meetings and investor days. Once the registration is declared effective, investors may sell their shares; however, the share price is not determined by underwriters, but rather, by buyers and sellers.

Any of these three paths will lead your company to the public markets. However, it is important to understand the benefits and challenges of each, so you can communicate your story effectively, meet any regulations and requirements, and set your company up for ongoing success.

Insider's Guide to Going PublicIf you’re considering taking your company public, download our eBook,

Westwicke Insider’s Guide to Going Public,

to get our team’s best advice on the entire process.


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