Foley & Lardner LLP partner Louis Lehot features in the Q&A, “How startups can get in top shape for an IPO, according to Silicon Valley lawyer Louis Lehot,” part of Business Insider‘s ‘Road to IPO’ series.
Describing the present environment for IPOs, Lehot acknowledged that 2023 was a tough year and emphasized that the outlook for the rest of 2024 and 2025 looks better.
“There’s a substantial backlog of companies preparing to go public as soon as the window opens, and the outcome of important federal and state election races should bring greater clarity,” he said.
Lehot identified health care, biotechnology, green energy, enterprise software, and fintech as the prime sectors for a successful IPO. He explained the key elements IPO investors are focused on in the current climate, including profitability or a clear path to it, sustainable revenue growth, robust metrics, and a disciplined approach to valuation.
“If you have a choice, you stay private,” Lehot said when asked if tech startups should want to go public at the moment. He cited the benefits to private ownership, including more control over business decisions, less regulatory scrutiny, and the ability to focus on long-term growth.
“However, the characteristics that drive a transformational CEO-founder to achieve this level of commercial success are not necessarily driven by the same logic,” Lehot added. “The vision of a transformational CEO extends far beyond the perceived short-term benefits of a quick exit. I’m surrounded by mission-driven CEO’s with the burning ambition to achieve global market ubiquity, which usually means an IPO is a necessary step on their long road.”
Lehot also touched on the important hires, biggest changes, and significant process updates companies need to make before they are ready to go public.