The U.S. Securities and Exchange Commission (SEC) has a renewed focus on bringing companies to public markets.
They quantified some of the benefits to companies of being public in a 2025 staff report, highlighting lower costs of borrowing and more access to finance, which increased investments. Another study we recently discussed shows that those factors contribute to employment and economic growth.
But public markets also contribute to household financial security and independence, while providing transparency and accountability to protect most investors.
Despite that, companies are going public later. U.S. initial public offerings (IPOs) used to have an average company age of eight years, compared to 11 years now.
One of the commonly stated reasons why companies stay private is the costs (and legal risks) of being public. We showed that the average costs of compliance for U.S. companies adds to around $9 billion each year. One of those costs is preparing quarterly SEC reports. We recently estimated that eliminating two quarterly reports for domestic issuers would save an average of 116 pages of filings per company. To their credit, this week, the SEC proposed semiannual reporting.
But there are also costs of preparing for and going public — and that’s what we hope to put more data around this week.
We break the data into two sets of costs to go public:
- Costs incurred before the IPO to make sure the company is ready to go public.
- IPO day costs.
Costs of getting ready to go public
Going public is a massive milestone for a company. It allows a company to raise capital in the markets, reinvest this capital into expansion or new products, and increase visibility. But, behind the scenes, a lot of decisions and costs go into the process well before IPO day.
The costs we include in this category involve getting the company itself ready to be a public company – from improved corporate governance and additional accounting to getting independent asset valuations for new investors and insurance for new directors.
Based on the sources we used, actual costs vary considerably – and depend on a company’s market capitalization, revenue, sector and the IPO offer deal size.
Chart 1: Pre-IPO cost estimates
To estimate these costs of going public:
- We used PwC Capital Markets data covering SEC filings for 10 years of IPOs. The data they collected covers actual costs disclosed by 1,239 companies for legal, accounting, underwriting, SEC registration, printing and distribution, miscellaneous, FINRA fees, and exchange listing fees. “Eligible companies” in PwC Capital Markets data excludes companies that raised less than $25 million, special purpose acquisition companies, best offerings, dual listings, min-max offerings, bank offerings, and domestic market uplistings.
- We used a few sources to get cost ranges for some non-disclosed costs like director and officer insurance, public relations, consulting, valuation, roadshow, corporate governance compliance, as well as internal controls and audit costs. We used the lowest end of the range for companies raising under $250 million, the median for companies raising $250 million to $1 billion, and the maximum value for companies raising over $1 billion.
To keep things simple, we combined the PwC (SEC) data with our non-disclosed costs estimates and show the average cost per IPO raise group, or a “typical” small, medium and large capital raise.
Costs of an IPO day
When a company gets to IPO day, there are additional costs, which include:
- Exchange listing fees
- SEC registration fees
- FINRA fees
- Underwriting
- Printing and distribution
- Roadshow
Chart 2: IPO execution costs
The data suggests underwriting is by far the biggest cost here (it goes off this chart, literally). Underwriting fees are generally 4% to 7% of total capital raised at IPO, but 50% to 70% of total IPO costs.
The roadshow is the next largest expense. A roadshow can involve a lot of executive travel to personally visit mutual funds and other professional investors. But it’s usually important to ensure enough investors understand the company and want to invest in its future.
Adding up the costs
If we add the data from Chart 1 and 2 together, we see how that underwriting dominates the total costs of going public. We also see it scales with the size of the IPO.
The average costs for all companies add to around $27 million. But for large capital raises, that can increase to around $90 million (according to our data sources).
We also see that the rest of the “IPO day costs” (blue colors) are relatively small.
Importantly, IPO prep costs, including governance, legal, accounting and insurance (orange colors), are more material – and are also ongoing. A company needs to have reasonable earnings or business scale to absorb these costs every year – even if costs of capital fall as a result of IPO.
Chart 3: Total costs of going public: Pre-IPO and IPO execution
Interestingly, miscellaneous expenses are the third largest cost for companies. These figures come from PwC’s aggregation of SEC filings, so they are actual amounts spent reported by companies that went public – but are dependent on what each company defined as “miscellaneous.”
Adjusting costs for capital raised
There are a combination of “fixed costs” that all companies must incur, as well as variable costs that scale with the size of the capital raise – or the complexity of the company.
That means large companies pay more in total, but fixed costs might impact small companies more.
Which raises the question: What is the “proportional cost” of an IPO?
To answer that, we look at the data on all 2025 IPOs (a total of 77 “eligible company” IPOs using the PwC Capital Markets SEC filing data). We combined their pre-IPO and IPO execution costs. In aggregate, these 77 companies spent $3 billion to go public in 2025 and raised $41 billion.
Chart 4: 2025 IPO total costs
We see that as companies get bigger (pink dots higher up in the chart) and raise more money (pink dots get bigger), their IPO costs are a lower share of their total raise amount (height of the grey bar).
- The weighted average cost for all 2025 IPOs was 7.2% of the offer amount.
- Costs for some smaller IPOs accounted for over 20% of the raise but closer to 3.4% of market cap.
- Costs for the five largest companies were an average of 5.1% of IPO raise but just 0.3% of market cap.
In short, while big companies pay more to IPO, the costs add to a lower share of their capital raised and valuation.
IPO costs still need to be weighed against lower costs of capital
It’s great to have data on the actual costs of doing an IPO – but costs are only half the story.
Other data shows that an IPO also reduces the costs of capital and increases the pool of investors available for when a company wants to expand. As the 2025 staff report showed, that can be a material benefit for the company and the U.S. economy.
