How to Answer “Walk me through the IPO process from start to pricing.” in Investment Banking Interviews

Start with the decision to go public and the bank selection process. The issuer runs a bake-off, appoints lead underwriters (and the wider syndicate), and aligns on objectives: primary vs secondary shares, target proceeds and use of funds, target investor base, exchange/listing venue, and high-level timing.

Then cover IPO readiness. The company and advisers build the working group (management, underwriters, legal counsel, auditors) and pressure-test whether the business and financials are “public-company ready”: audited statements, governance, internal controls, KPIs, and the equity story. At this stage, it’s fine to mention an initial valuation view using public comps and recent IPOs—enough to frame expectations without pretending pricing is final yet.

Next comes due diligence and drafting. Underwriters perform business, financial, and legal diligence to support the offering and manage underwriting risk, while the company and counsel draft the registration statement (e.g., S‑1/F‑1 depending on jurisdiction) including risk factors, business overview, MD&A, financials, and use of proceeds.

Tie this to the analyst work: data room requests, diligence trackers, drafting support, and modelling to articulate the investment case. This is also where IPO valuation questions often show up—how you choose a peer set, which multiples or metrics matter for the sector, and how growth, margins, and cash conversion translate into an investable narrative.

Once the draft is mature, the company files the registration statement and enters the regulator review process. You typically go through comment letters and amendments until the regulator is comfortable with the disclosure. This is the “get cleared to market” phase.

In parallel, the banks prepare to market: roadshow deck, research/education (subject to rules), investor target list, and internal materials. A key point in IPO process interview questions is information discipline—what’s inside the filing and what can be said externally—as you move from private diligence into a public marketing process.

After clearance (or when marketing is permitted), the deal is launched with an initial price range and share count. Management and the banks run the roadshow, meeting institutional investors to present the equity story and answer questions.

During bookbuilding, the syndicate collects indications of interest and orders with price/size limits. For “walk me through the IPO pricing strategy,” emphasise that demand isn’t just total shares ordered—it’s quality and sensitivity: long-only vs fast money, concentration risk, and how demand changes as you move the price within/above the range. The bank updates the issuer and may adjust the range or size as the book develops.

At the end of the roadshow, the issuer and underwriters set the final offer price and final share count, informed by the order book, relative valuation versus comps, and overall market conditions. The objective is typically to balance issuer proceeds and a supportive aftermarket trading profile.

Then the syndicate allocates shares to investors, aiming to build a stable shareholder base. You can briefly mention underwriting mechanics around pricing—like the overallotment/greenshoe option and stabilisation rules—as tools to manage excess demand and early volatility. For this question, keep the endpoint at pricing/allocation rather than drifting into long post-IPO trading details.