Despite stock market volatility, tech firms, encouraged by successful initial public offerings by firms such as Groupon, are once again eyeing IPOs, but a new survey by Ernst & Young points out the costs of going public.

According tothe survey, a new U.S. listed public company can expect to spend, on average, an additional $2.5 million annually post IPO, excluding the one-time costs related to executing the IPO.

A large part of the true incremental costs to be a public company includes compensation to attract and retain top management and board members, which ultimately helps secure investors and benefits the company in the long term.

Moreover, 80% of all companies made new investments in IT or software applications in contemplation of going public. 60% of companies made investments in an equity software package.  25% of the companies surveyed acquired new enterprise resource planning (ERP) software prior to the IPO.

Ernst & Young LLP’s inaugural True Costs of IPOs Survey examined the experiences of 26 companies that went public in the U.S. between 2009 and 2011.

The survey group included companies of varying sizes, ranging from annual revenues below$100 million to over $4 billion, with the average and median annual company revenues of $517 million and $143 million, respectively.

Companies operated in a wide range of industries, including healthcare, real estate, biopharma, technology, industrial products, financial services, retail and manufacturing. The survey focused on four key areas: management, board, advisors and technology.

“With the U.S. IPO pipeline full and primed for companies to go public in the fourth quarter and beyond, it’s important for management to understand the true cost of not only being a public company, but also consider the value a good management team can provide especially in volatile markets,” said Jacqueline Kelley, Americas IPO Leader for Ernst & Young LLP’s Strategic Growth Markets practice.

“Never before has it been more imperative for public companies to demonstrate management credibility as they face higher scrutiny from both investors and regulators.”

Management: Every company that provided information about management compensation indicated that it had increased compensation in contemplation of going public, whether through salary, bonus or stock options.

Most compensation increases were extended to the CEO, CFO and others in the finance function. 23% of companies had an in-house investor relations executive, and 50% had in-house counsel. On average, companies spent an additional $1.5M annually on salaries to management and others as a new public company.

Board: 82 percent of companies had either added new members to their Boards of Directors or increased director compensation prior to their IPO. 68 percent added at least one new Board member, and almost of all these companies added two or more. A similar percentage (64%) provided additional compensation to existing Boards.

Advisors: One of the more significant costs associated with IPOs are fees paid to advisors.  Most companies retained at least 11 third-party advisors in connection with the IPO. All (100%) of companies surveyed retained investment bankers, attorneys, auditors and stock exchanges.

The majority of companies engaged a printer (96%), D&O insurance carrier (92%), stock transfer agent (84%), SOX 404 consultant (76%), compensation advisor (72%), investor relations firm (68%) and tax advisor (60%). Some companies also hired a road show consultant (40%), a compensation advisor to the board (28%) and an internal audit advisor (12%).

On average, the companies surveyed spent $13 million in one-time advisory costs associated with executing the IPO. Companies spent an additional $1 million annually on various recurring advisory costs as a new public company.