Liquidity Options: IPO, SPAC or M&A

Why it Matters

• IPOs can raise significant capital but demand rigorous preparation and public scrutiny.
• SPACs offer a faster liquidity option but requires readiness for public company standards.
• M&As provide flexibility and fewer compliance requirements but may limit your control over the business.

What Are Liquidity Options?

Liquidity options are the strategic pathways business leaders use to convert their ownership into cash or other forms of liquidity. The three primary liquidity options include initial public offering (IPO), special purpose acquisition company (SPAC) and partial strategic or private equity sale (part of M&A). These options are pivotal for founders, investors and stakeholders looking to unlock the value of their investments or fund the next stage of growth.

Without a solid plan, pursuing liquidity can lead to unexpected hurdles ― ranging from unforeseen obstacles to outcomes that fall short of your goals. This is why exit planning is such a crucial (and often overlooked) element of a smart business strategy.

In this white paper, we’ll explore the opportunities and challenges of IPOs, SPACs and M&A, equipping you with the insights you need to assess your goals, prepare your business and select the best strategy to maximize the value you’ve built.

• Paths to Liquidity: Your Options
• What You Should Know About IPO
• What You Should Know About SPAC Mergers
• What You Should Know About M&A
• Liquidity Options
• Exit Strategy Questions to Consider
• Need Liquidity, But Not Ready to Go Public? Consider Secondary Sales
• Prepare for Public Liquidity: IPOs, SPACs and Beyond

Paths to Liquidity: Your Options

The decision to pursue liquidity often depends on opportunity and timing. Whether it’s a promising offer from a buyer, funding a founder’s retirement, satisfying investors or fueling the next stage of growth, choosing the right liquidity option — IPO, SPAC or M&A — requires careful consideration and planning.

The right liquidity option for your business will depend on several factors, including:

• The lifecycle stage of your company (growing, stable or declining revenues)
• Ownership structure (founder/individual, group of investors or private equity owned)
• Current market conditions, economic trends and regulatory environment
• Interest and readiness to operate as a public company
• Liquidity goals such as vesting timelines or earn-out considerations

What You Should Know About IPO

An IPO is a liquidity option that involves offering a company’s shares to the public for the first time, allowing it to raise capital while providing investors with the opportunity to convert their ownership into cash. When leaders think about going public, an IPO is often the first thing that comes to mind.

A successful IPO can generate significant capital to drive business growth and while also creating opportunities for employees to cash in on their stock options. In some cases, this liquidity happens even before the IPO, through secondary markets that allow employees to sell shares to outside investors.

In our experience, the rigors of going public are complex, costly and unpredictable. It involves heighted regulatory scrutiny and significant costs for legal, accounting and audit services. Additionally, transaction and listing fees, as well as the cost and effort of roadshows to market the company, add to the financial burden. Achieving IPO readiness requires careful planning, substantial resources and a clear understanding of the challenges ahead.

The risks and realities of IPOs

While the rewards of going public can be significant, the risks are equally high. The IPO market is notoriously volatile, with factors far beyond any single company’s control. Timing is critical, and the risk of failure is ever present.

Since the IPO surge of 2020-2021, investor priorities have shifted. Today, private equity and venture capital-backed companies look to balance growth with profitability within 18 months — a stark contrast to the earlier focus on growth at any cost.

IPO market trends and drivers

Despite recent market challenges, IPO activity is rebounding. In the first half of 2025, there were 49 IPOs (excluding SPACs, REITs and banks/direct listing), compared to 48 in the same period of 2024, according to Capital IQ data. This rebound reflects improved investor sentiment, strong fundamentals in technology and healthcare and an active pipeline of high-profile listings.

Key drivers of IPO activity

• Sectors leading the rebound: Technology, healthcare and energy are driving IPO momentum. Tech and artificial intelligence (AI) IPOs are attracting strong investor interest, while diagnostic and biotech companies continued their growth from 2024.
• IPO window and outlook: The IPO window is open, with high-profile deals and increased investor risk appetite supported by favorable capital market conditions. About half of the top 10 IPOs occurred in June 2025, signaling a strong finish to Q2.
• Future pipeline: Many well-capitalized companies, including tech giants, fintech innovators and healthcare firms, are poised for IPOs later this year, backed by strong financials and experienced management.

Additional IPO catalysts

• Private equity backlog: Private equity firms hold mature companies ready for public exits, potentially accelerating offerings as market conditions stabilize.
• Sector innovation: Advances in AI infrastructure, cloud computing, precision medicine and clean energy are fueling IPO interest, offering disruptive growth prospects and attracting investor interest.
• Capital market environment: Steady monetary policy, clearer tariff outlooks and improved business confidence are expected to facilitate a “slightly above average” year for IPO capital raises, especially if market volatility remains contained.
• SPAC influence: Although SPAC IPOs remain active, traditional IPOs are regaining prominence and improving in quality, reflecting shifts in investor preference.

Prepare for the IPO journey

Before pursuing the high-risk, high-reward IPO liquidity option, carefully evaluate your readiness and the challenges ahead:

• Going public takes an average of 18 to 36 months, though exceptionally prepared companies may achieve it in 8 to 12 months.
• Navigating an IPO requires coordination among many stakeholders, including investment bankers, accountants, attorneys and regulators.
• Founders and early investors often face a 90- to 180-day “lock-in” period during which they cannot sell their shares, delaying their ability to cash out.

What You Should Know About SPAC Mergers

A SPAC merger is a liquidity option where a private company merges with a publicly traded shell corporation created specifically to raise capital for acquisitions. This process allows the private company to access public markets more quickly and with fewer upfront costs than a traditional IPO. SPACs provide a clear valuation and faster speed to market, potentially reducing some of the risks associated with traditional IPOs. This liquidity option allows private companies to access capital and secure investors through private negotiations with the SPAC sponsor, making them a viable alternative for companies that may not yet meet the financial requirements of a traditional IPO.

SPACs return to pre-boom levels

For the first half of 2025, there were 63 SPAC IPOs as compared with 16 over the same period in 2024, a 294% increase, according to Capital IQ. And capital raised was up by 407% to $12.9 billion during the first half of 2025 as compared with $2.5 billion over the same period in 2024.

With the recent passage of the One Big Beautiful Bill, companies could see investor interest increase for SPACs as a liquidity vehicle for accessing high-growth sectors like AI, fintech and healthcare.

Considerations for SPAC transactions

As you consider the SPAC liquidity option, here are some factors to keep in mind:

• The speed to market is much faster for SPACs ― typically six months or less. This can be a major disadvantage if your company isn’t ready to be public.
• SPACs have 18 to 24 months to complete a merger. If they fail, the SPAC must delist from the exchange, liquidate the funds held in trust and start the entire process over.
• Target companies must be prepared for public company requirements. Carefully consider your readiness in financial reporting, tax, legal, SEC reporting and governance frameworks.

What You Should Know About M&A

Mergers and acquisitions (M&A) provide a liquidity option where a private company achieves liquidity by merging with or being acquired by another company. This approach allows the selling company’s shareholders to monetize their equity, either through cash, stock in the acquiring company or a combination of both. Among the three liquidity options covered in this white paper, M&A is the most common exit route, offering a faster and often more flexible alternative to traditional public offerings.

The success of an M&A transaction often hinges on the type of buyer, as this will shape the acquired company’s strategic direction, operational priorities and cultural integration.

M&A offers a path to liquidity without the extensive disclosure, compliance and scrutiny required for an IPO, making it an attractive option for many private companies. While M&A activity fell during Q1 2025 due to economic uncertainty, both strategic and financial buyers continue to show strong interest in M&A.

Key factors to consider about M&A

Navigating the M&A process requires careful planning and a clear understanding of implications. Here are some critical factors to consider:

Deal structure

• In a merger, two entities combine to form a single organization, often with shared leadership and operations.
• In an acquisition, the buyer takes control of the target company’s assets, and key personnel, including the founder, may be retained as part of the deal structure.
• If the acquiring company is publicly traded, the target company must prepare to meet public company requirements.

Timeline and complexity

• The M&A process can take from six months to a year or more to complete.
• Due diligence, valuation and negotiation are often the most time-intensive steps.

Cultural integration

Aligning the cultures of the two organizations will affect long-term success, particularly in mergers. Misalignment can lead to operational inefficiencies and employee turnover.

Control and strategic direction

Founders and management teams may lose control over the company’s strategic direction, depending on the buyer’s goals. It’s essential to understand and align with the buyer’s vision for the business.

Liquidity Options: IPO, SPAC or M&A

When it’s time to unlock the value of your private company, you have three primary liquidity options: IPO, SPAC or M&A. Each path offers unique benefits, timelines and trade-offs. Here’s a quick guide to help you compare.

Key Highlights About Each Liquidity Option

Which Liquidity Option Is Right for You?

Do you want to retain control?

• Yes → IPO
• No → Next question

Do you need liquidity quickly?

• Yes → SPAC or M&A
• No → IPO

Do you want to negotiate terms?

• Yes → M&A
• No → SPAC

Exit Strategy Questions to Consider

Choosing a liquidity option is a complex, difficult decision with many implications for owners, their heirs, employees and investors. The outcome of your exit strategy depends on a variety of factors, from market conditions to your company’s unique goals and circumstances.

Working with a trusted advisor can simplify this process and provide clarity in understanding complexities. An experienced team brings valuable knowledge, proven best practices and a strategic perspective to help you evaluate your liquidity options and choose the best path forward. However, the foundation of a successful plan lies in your input ― your vision, priorities and goals will shape the strategy and define the liquidity path to unlocking the most value.

Need Liquidity, But Not Ready to Go Public? Consider Secondary Sales

For companies not ready to go public, a secondary sale or a “liquidity round” offers an alternative exit option. In this scenario, founders, employees or investors sell their (partial) stake in the business to another investor, such as an existing shareholder, growth fund or private equity firm. This liquidity approach provides cash to shareholders while allowing the company to stay private, giving it more time to grow and prepare for a potential public offering or other exit strategy. Secondary sales are also an effective way to address employees’ liquidity needs without requiring the company to sell itself, change ownership or go public.

Prepare for Public Liquidity: IPOs, SPACs and Beyond

For any company planning to transition from private to public, preparation must begin far in advance. Achieving IPO readiness often takes years and requires aligning your people, processes and technology to ensure your business is ready to operate as a public company from day one. Whether through an IPO, SPAC or other public path, the journey demands careful planning and execution. Check out our IPO readiness checklist to guide your efforts.

Take the Next Step Toward Liquidity

Ready to explore your liquidity options? Learn how the Armanino Advisory team can help you navigate the business, accounting, tax, legal and HR considerations that shape a successful IPO, SPAC or M&A. We’ll help you create a tailored strategy that works for you and your stakeholders ― and bring your next chapter to life.