The Five Mistakes Private Companies Make Before Their IPO

Most IPO failures in Indonesia are not market failures. They are preparation failures. The company reaches the public market without having fully resolved the structural, financial, or narrative conditions that a successful offering requires.

The following five mistakes appear consistently. They are not exotic. They are the same errors, made by different companies, in different sectors, across multiple listing cycles.

Mistake one: Starting too late

The most common mistake is also the simplest. Companies decide to pursue an IPO and begin preparation twelve months before the intended listing date, treating that as sufficient lead time. It rarely is.

The formal OJK and IDX process, from prospectus filing to listing, typically takes six to twelve months. That means the entire preparation window, the period in which financials are normalised, governance is established, structure is cleaned up, and the investor narrative is built, must be compressed into whatever time remains before the filing.

The consequence is predictable. Gaps are papered over rather than properly addressed. The KAP is engaged under time pressure and produces statements that require significant revision. Governance structures are assembled at the last moment and lack the operating history that investors expect. The equity story is constructed quickly and lacks the specificity that supports bookbuilding.

The remedy is equally simple: begin eighteen to twenty-four months before the intended listing date, even if the preparation feels premature. The extra time is not wasted. It is the margin that converts an adequate offering into a strong one.

Mistake two: Treating the underwriter as the lead advisor

Companies often assume the underwriter will drive the preparation process. This assumption misunderstands the underwriter's role. The underwriter manages the offering, coordinates the book, and handles distribution. Its obligation is to the integrity of the market and the transaction, not to maximising the company's preparedness.

A company that relies on its underwriter to identify and resolve readiness gaps will find that those gaps surface late in the process, under time and reputational pressure, when they are most costly to fix.

The company needs its own advisor. Someone working solely on its behalf, with no interest in the transaction closing on any particular timeline, whose only objective is ensuring the company is genuinely ready.

Mistake three: Underestimating the financial normalisation required

Private companies carry accounting practices that are entirely standard in a private context but require adjustment for a public offering. These include: owner salaries set at non-market rates, related-party transactions that are economically legitimate but not properly documented, revenue recognition practices that are inconsistent across periods, and cost structures that include personal or family expenses absorbed by the company.

None of these are unusual. Most private companies in Indonesia have at least some of them. The issue is not the existence of these practices but the time and effort required to normalise the financials so that they present a clear, unambiguous picture of the underlying business performance.

This normalisation process almost always takes longer than expected. It also frequently requires a conversation with the existing auditor about restatements or adjustments to prior-period statements, which adds further complexity.

Mistake four: Neglecting governance until the final phase

Governance is not a compliance exercise that can be completed in the weeks before listing. It is a structural change to how the company operates, and it requires time to become credible.

An Audit Committee established three months before the prospectus filing date has no track record. It has not reviewed a single set of management accounts. It has not conducted an internal audit cycle. Investors and OJK reviewers are aware of this. A governance structure that exists only on paper, without any demonstrated function, provides weak assurance.

Governance structures should be established, and should begin operating, at least twelve months before the intended listing. The Audit Committee should meet regularly. Internal audit should complete at least one full cycle. The Board of Commissioners should have a documented record of deliberation. This operating history is what converts a governance structure from a compliance formality into a genuine institutional foundation.

Mistake five: Building the valuation before building the story

Companies frequently approach the IPO with a valuation number in mind, derived from comparable transactions or a desired fundraising outcome, and then attempt to construct a narrative that justifies it. This sequence is backwards.

The investor narrative should come first. It should be specific, credible, and independently compelling: what the business does, why it occupies a defensible position, what the market opportunity is, and how the IPO proceeds will be deployed to capture that opportunity. The valuation then follows from the quality of that narrative and the financial performance that supports it.

Companies that anchor on a valuation number first often produce prospectuses that feel promotional rather than analytical. Investors read prospectuses carefully. A narrative that appears to be constructed backward from a desired price rarely survives the bookbuilding process intact.

The common thread

Each of these mistakes shares a single root cause: insufficient time. Companies that give themselves genuine preparation time, that begin the process early and address each dimension systematically, consistently avoid the most costly errors. The IPO process rewards preparation in direct proportion to the honesty and thoroughness with which it is conducted.