Apr 15, 2015 · 4 minutes

There are some news stories where the jokes just seem to write themselves, but that doesn't keep us writers from taking a shot. And so when Ashley Madison said it's planning an IPO in London, there were all kinds of puns about hooking up, how the IPO market is getting steamy, how cheating pays on Wall Street, and so on.

Ashley Madison doesn't hide the fact that it's a dating site for adulterers - in fact it celebrates this in commercials. The site is owned by Toronto-based Avid Life Media, which also owns dating sites like Cougarlife.com and EstablishedMen.com. According to reports on Bloomberg and the Financial Times, the company is exploring an IPO on the London Stock Exchange or its junior AIM market.

Avid Life has many attributes favored by investors: It's an established social-media play. It says it has years of steady growth and profits. It's in the middle of a successful push into overseas markets. A profile this year of the company in Forbes said Avid Life's revenue rose 45 percent in 2014 to $115 million and its pretax profit totaled $55 million.

That profile also began with an admission by Ashley Madison's CEO that he “will usually lie if a passenger on an airplane asks him what he does for a living.” And that gets at the downside of an Avid Life IPO, which is that while morality may be a fluid thing in the markets – investors will usually look harder at the bottom line than the decisions made to get there – there appear to be some lines they won't cross. And a site that exists largely to facilitate extramarital affairs is on the far side of those lines.

Avid Life has been talking about an IPO for years. Five years ago, it tried to arrange a complex merger and reverse takeover that would have listed the stock on a Canadian exchange. But as observers noted at the time, “the deal was dead before it started.” Two years ago, another report noted that bankers in New York were “very quietly flirting” with the idea of a US IPO but now the company seems to have decided on Europe as its best chance for an offering.

An Avid Life executive told the FT that a London IPO was being sought because “Europeans have a more laid back, laissez faire attitude to infidelity.” Leaving aside the wisdom of equating UK culture with the rest of Europe, Avid Life has other pre-IPO hurdles to overcome. Which investment banks are willing to put their name on the top of the prospectus? Which analysts are going to write recommendations of the stock? Which investors will face public rebuke by buying into the offering? To date, Avid Life's private investors remain anonymous.

Ashley Madison was banned in South Korea, until the company filed suit against the government and prompted the overturning of a decades-old law banning adultery. It remains banned in Singapore. While its TV spots run on some cable channels, other ad initiatives have been rebuffed, including an annual effort to place an ad during the Super Bowl as well attempted sports sponsorships.

There's also the question of what due diligence will surface in the prospectus. Ashley Madison has had 31 million users since it was founded in 2001, while in the three months through November, 6.8 million users logged in to the site. Tinder, whose momentum Ashley Madison may try to ride toward an IPO, has around 40 million active users per month.

Ashley Madison is not a social network like Tinder, but a subscription service. The Forbes profile said the site's revenue mainly comes from male subscribers who spend between $200 and $300 a year to contact women. At $250 per paying user, Ashley Madison had about 460,000 customers last year. While the 30-plus million user figure is often mentioned by the company, the revenue looks to come from less than 2 percent of that figure.

It's also not clear how many of the female profiles, the ones that the men are paying to reach, are active. A quick search for complaints by Ashley Madison members yields a lot of grumbling about fake profiles on the site, along with the $20 fee for deleting a profile. In 2012, Ashley Madison was sued by a Brazilian employee who claimed to have injured her wrists typing out thousands of bogus profiles. After Ashley Madison countersued, both lawsuits were dismissed in January.

Such controversies only add to the hurdles Avid Life will have to surmount if its private investors want a payout. That's the real punch line facing Ashley Madison: By so brazenly championing its controversial business model, the company is being shunned by, of all people, stock investors. In a private market flooded with ready cash and a public market starved for profitable tech IPOs, Ashley Madison is still having trouble finding the exit.