An IPO is a public-market financing event that the sponsor structures, prices, and lives with for two years afterward. The sponsor's role is dual: seller of the IPO shares, and ongoing controlling shareholder responsible for governance through the lockup and beyond.
S-1 and the registration process
The S-1 is the SEC registration statement, 200+ pages of business description, MD&A, audited financials, risk factors, and detailed disclosures. Drafting takes 4–6 months with the sponsor's underwriting bank, the issuer's legal counsel, and the auditor. The first amendment incorporates SEC comments; the final amendment becomes the prospectus on pricing day.
Roadshow and pricing
Once the S-1 is on file, the lead underwriters take the management team on a 2-week global roadshow — meeting institutional investors who will anchor the offering. Indications of interest build the order book; the underwriters and issuer set the price range, then narrow to a final price the night before trading. Underpricing — first-day pop — is structural in IPOs (issuer leaves money on the table; underwriters allocate to favoured clients).
Lockup and overhang
Insiders (sponsor, founders, employees) typically agree not to sell shares for 180 days. The lockup expiration is a known supply event. Sophisticated sponsors plan the lockup expiration around earnings cycles and market conditions. The overhang — public knowledge that a large pre-IPO holder will eventually sell — depresses the post-lockup share price. Modern best practice: structured selling programs (Rule 144), block trades to crossover funds, secondary offerings with market-friendly pricing.