The cost of going public through a traditional IPO typically runs $10 million to $20 million in direct expenses for a mid-sized deal, and underwriting fees alone eat roughly 7% of the capital raised. That is only what appears on invoices. Add the shares effectively handed to first-day investors through underpricing and the permanent overhead of running a public company, and the real bill climbs well past the sticker. Every issuer, regardless of size, pays across the same categories: bank fees, legal work, audits, regulatory filings, exchange charges, and a lasting jump in operating costs.
Underwriting Fees: The Biggest Line Item
Investment banks earn their pay through the gross spread, the gap between the price they pay the company per share and the price at which they sell those shares to investors. For offerings under $200 million, 7% is essentially standard. In data covering 2001 through 2025, more than 93% of IPOs raising between $30 million and $160 million carried a gross spread of exactly 7.0%.1The IPO Initiative. Initial Public Offerings: Underwriting Statistics Through 2025 On a $100 million offering, $7 million goes to the syndicate before the company touches a cent.
Bigger deals get better rates, but not dramatically. Offerings between $200 million and $1 billion averaged a 6.42% gross spread over the same period, and billion-dollar-plus IPOs averaged about 4.44%.1The IPO Initiative. Initial Public Offerings: Underwriting Statistics Through 2025
The spread itself splits three ways inside the syndicate. A common allocation gives 20% to the management fee (for organizing the deal), 20% to the underwriting fee (for guaranteeing the sale), and 60% to the selling concession (for the brokers who find buyers).2Renaissance Capital. IPO University – Gross Spread Smaller deals sometimes add a “nonaccountable expense allowance” of up to 3% of proceeds on top, pushing total bank compensation higher still.
Underpricing: The Cost That Never Gets Invoiced
The largest expense of going public shows up on no bill. Underpricing is the gap between the offering price and where the stock closes on its first trading day, and it represents capital the company effectively gave to initial investors. In 2025, the mean first-day return for IPOs was 29.3%, and issuers collectively left $13.11 billion on the table.3The IPO Initiative. Initial Public Offerings: Underpricing
If shares price at $20 and close at $26, that $6 per share could have funded the company instead of rewarding institutional buyers who got in at the offering price. On a 10-million-share deal, that is $60 million in forgone capital. Banks have some incentive to underprice, since it moves shares faster and keeps institutional clients happy, which sits in tension with the issuer’s interest in maximum proceeds. For many offerings, this single cost dwarfs every fee combined.
Legal Fees and Regulatory Filings
Securities lawyers carry the heaviest advisory workload: drafting the Form S-1 registration statement, running due diligence on every material claim, and moving the document through SEC review.4U.S. Securities and Exchange Commission. What is a Registration Statement Legal fees generally run $1 million to $3 million, and climb for companies with complicated corporate structures, multiple subsidiaries, or intellectual property that needs detailed risk disclosure.
Two mandatory government fees are added. The SEC’s Section 6(b) registration fee for fiscal year 2026 is $138.10 per million dollars of the maximum offering price, which works out to about $13,810 on a $100 million offering.5Securities and Exchange Commission. Section 6(b) Filing Fee Rate Advisory for Fiscal Year 2026 FINRA charges $500 plus 0.015% of the maximum aggregate offering price to review the underwriting arrangements, capped at $225,500.6Financial Industry Regulatory Authority. Fees for Filing Documents Pursuant to the Securities Offerings Rules On the same $100 million deal, FINRA collects roughly $15,500. Modest numbers, but non-negotiable and due before the offering can move.
Accounting, Audit, and Internal Controls
Public companies must file financial statements audited by a firm registered with the Public Company Accounting Oversight Board.7Public Company Accounting Oversight Board. Standards A standard Form S-1 needs two years of audited balance sheets and three years of audited income statements, cash flow statements, and statements of changes in stockholders’ equity.8U.S. Securities and Exchange Commission. Financial Reporting Manual – Topic 1 Emerging growth companies need only two of each.
Outside audit work typically costs $500,000 to $1.5 million depending on business complexity, number of operating locations, and international footprint. The audit is just the entry point. Section 404 of the Sarbanes-Oxley Act requires companies to build and test internal controls over financial reporting, which means documenting every significant transaction process, testing whether the controls work, and fixing gaps. Building those controls from scratch adds $200,000 to $500,000 for smaller companies and more for complex ones.
The bill continues after the debut. A 2023 survey cited in a Government Accountability Office report found companies with a single operating location averaged about $700,000 in annual internal compliance costs, and companies with ten or more locations averaged around $1.6 million. When companies move from exempt to non-exempt status for auditor attestation of internal controls, audit fees jump by a median of $219,000, a 13% increase, in the transition year.9U.S. Government Accountability Office. GAO-25-107500, Sarbanes-Oxley Act: Compliance Costs
Exchange Listing Fees
Exchanges charge separately for the right to trade on their platform. The Nasdaq Global Market charges a $325,000 entry fee for a company’s first listed class of securities.10The Nasdaq Stock Market. Nasdaq 5900 Series Smaller venues, including NYSE American and Nasdaq Capital Market, start initial fees at $50,000.11New York Stock Exchange. NYSE MKT Fee Comparison
Annual fees are the more persistent charge. Nasdaq’s all-inclusive annual listing fee ranges from $59,500 for companies with up to 10 million shares outstanding to $199,000 for those with more than 150 million shares.10The Nasdaq Stock Market. Nasdaq 5900 Series The NYSE main board uses a per-share model, currently $0.001310 per share annually with an $84,000 minimum.12Federal Register. Self-Regulatory Organizations; New York Stock Exchange LLC
Roadshow and Printing
Before shares trade, executives spend one to two weeks pitching the deal to institutional investors during a roadshow. Private jet charters, hotel suites, venue rentals, and support staff can exceed $250,000, with the total swinging on the scope and geography of the tour.
The company also pays to print and distribute the preliminary prospectus, commonly called the “red herring” for the red disclaimer on its cover.13Legal Information Institute. Preliminary Prospectus Digital distribution has trimmed some of this, but institutional investors and certain regulatory filings still need physical copies, and financial printers charge a premium for the speed the SEC timeline demands.
Recurring Costs After the IPO
The offering is a one-time event; the costs it triggers are not. Expect a permanent increase in annual operating expenses across several fronts.
Ongoing Reporting and SOX Compliance
Quarterly 10-Q filings, annual 10-Ks, and proxy statements all require legal review, auditor involvement, and SEC-compliant formatting. Financial statements must also be tagged in Inline XBRL, which most small companies outsource for $10,000 to $20,000 a year. Sarbanes-Oxley is the heavier lift: internal compliance runs $700,000 to $1.6 million annually depending on complexity, and Section 404(b) auditor attestation, when it applies, adds another $200,000 or more on top of the baseline audit fee.9U.S. Government Accountability Office. GAO-25-107500, Sarbanes-Oxley Act: Compliance Costs
Board Pay
Public companies need an independent board, and independent directors expect to be paid. Among Russell 3000 companies, the median independent director gets a $75,000 annual cash retainer plus about $150,000 in stock awards, for roughly $257,000 in total median compensation. A typical five-to-seven-member independent board runs $1.3 million to $1.8 million a year, before extra retainers for audit and compensation committee chairs.
Investor Relations and D&O Insurance
A dedicated investor relations function, whether in-house or outsourced, costs $200,000 to $500,000 a year for earnings calls, analyst communications, shareholder outreach, and disclosure management. Directors and officers liability insurance is the other new line most private companies underestimate. Premiums vary widely by industry, size, and perceived litigation risk, but at the coverage levels public markets demand it becomes one of the larger recurring expenses.
Ways to Lower the Bill
Several regulatory categories cut both initial and ongoing costs for smaller issuers.
The JOBS Act created the “emerging growth company” category. A company qualifies if it had less than $1.235 billion in annual gross revenue in its most recent fiscal year and did not sell common equity under a registration statement before December 2011. The status lasts five years after the IPO unless the company crosses one of several growth thresholds first. Emerging growth companies need only two years of audited financials in the S-1 instead of three, are exempt from Section 404(b) auditor attestation, face reduced executive compensation disclosure, and can “test the waters” with institutional investors before filing publicly.14U.S. Securities and Exchange Commission. Emerging Growth Companies
Non-accelerated filers, meaning companies with a public float under $75 million, or under $250 million with less than $100 million in revenue, also avoid the Section 404(b) auditor attestation requirement.15U.S. Securities and Exchange Commission. Smaller Reporting Companies Together, these exemptions can shave hundreds of thousands of dollars off both the offering and the years that follow.
A direct listing removes the largest cost entirely. Existing shares sell directly to the public on an exchange without an underwriter buying and reselling them, which eliminates the gross spread.16U.S. Securities and Exchange Commission. What Are the Differences in an IPO, a SPAC, and a Direct Listing Legal, accounting, and exchange fees still apply. The tradeoff: a direct listing does not raise new capital unless structured as a primary direct floor listing, and there is no banking syndicate marketing the shares or supporting the price. For most companies, the traditional IPO remains the default because the underwriter’s distribution network and price stabilization justify the cost.