When rumors start swirling that a company is thinking about going public, two groups often come running. First to the front door are the investment bankers, who want to both take you to the IPO and represent you afterwards on secondary offerings, acquisitions and the like. Right behind the bankers are often the strategic acquirers.
Why? Because these larger players in your sector know that once you are public you will have more resources to compete with them for customers and partnerships, you will have the same publicly traded stock as they have to use in acquisitions, you will command the attention of the “street” as the new golden child, and perhaps, most importantly, you will be more expensive for them to acquire.
So preparing for an IPO can be the best way to smoke out a preemptive bid from the perfect strategic player. The downside scenario isn’t too bad either: you might just have to go public!