Dec 14, · Going public through an initial public offering (IPO) is not an easy process, and must be planned for in a methodical way to achieve the potential benefits of being a public company. “Planning, executing, and managing an initial public offering is a challenging task for any organization, especially for its CEO and CFO. CFOs FOR IPOs: Should Companies Hire for an IPO or for Long Term? The Groupon and Zynga experiences highlight the differences between start-up companies when they hire a CFO: Child was perceived as a good long-term financial manager, albeit with little listing experience. “Someone who can influence and convince management of the need. Oct 22, · How much more money do we need? When it comes to hiring a CFO, don’t wait too long – and don’t hire too high. Every day, I see companies achieve this without an IPO (or CFO. Aug 22, · All of the above is why it’s not a good idea to hire a CFO just before you IPO — or worse, have your CFO exit your business soon after you IPO (a highly destabilizing event). You need to hire. Nov 21, · Watch these two videos focused on IPO readiness, including the challenges faced by CFOs and the steps needed in picking the right team, adopting the habits of a public company and making taxes a Author: EY Contributor.
- When Should Startups Hire A CFO?
- 16 things CEOs should do before an IPO
- CFO Need To Know - Steps To IPO Readiness
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- Preparing a Successful IPO in 2018
Oettinger and Mr. Completing an IPO is an enormous milestone for any company. Along with the excitement, liquidity, and attention, IPOs also bring the responsibility of Securities and Exchange Commission SEC reporting, increased regulatory burden and tougher public scrutiny.
When Should Startups Hire A CFO?
In order to prepare for these additional challenges, there are certain action items that we advise our clients to undertake before the IPO process begins. As it often takes time to implement these action items, we encourage clients to start early. These action items are important for any company, but are especially crucial for healthcare and biotech companies because, compared with their counterparts in other industries, they tend to be earlier stage and, in some cases, pre-revenue, which means they likely have less infrastructure to deal with these challenges.
Below are three main areas of focus to prepare for a successful IPO in The most important part of IPO preparedness is ensuring that you have sufficient internal financial resources. The chief financial officer CFO is the most important member of the finance team and the most important company representative during the IPO process. If you are contemplating an IPO and do not have a CFO with public company experience or who is up for the challenge of learning on the job , hiring such a CFO should be your highest priority.
16 things CEOs should do before an IPO
Particularly for companies with revenue, your second priority should be to consider hiring a controller, with a strong preference for someone with public company experience. An experienced controller can help ensure that you have the processes in place to meet public company reporting timelines and maintain internal accounting and control standards, which would enable the CFO to focus on higher-level matters.
Other hires in the finance department may be necessary depending on the size and complexity of your accounting and finance functions, but these two are the most important.
A third position that can take a lot of lead time to fill is the Audit Committee Chair.
CFO Need To Know - Steps To IPO Readiness
Board members with financial experience are in high demand, and it is important to find someone whose style is compatible with the rest of the board. We often see companies focus on finding their Audit Committee Chair before they even build out the finance management team below the CFO.
As the challenges facing your company grow, both due to internal growth and new regulatory and reporting burdens as a public company, your financial organization may need to upgrade from in many cases Microsoft Excel spreadsheets to a more scalable and efficient financial reporting technology solution. As you plan your SEC reporting and accounting processes, you should ask your auditors what they see as standard for a company of your size in your industry.
In addition to your internal hiring, you will need to evaluate and eventually choose a large external team to support you through the IPO process and as a public company, which should include the following:.
Hiring internally and engaging external providers are important parts of the process, but it is just as important for you to gather your internal documentation, evaluate your internal process, and make necessary changes before and during the IPO process.
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There are many things to consider, but some key items you should address are the following:. The mere exercise of preparing for an IPO can be a catalyst for a lot of positive change at a growing company. Many of our clients contemplating an IPO still have startup infrastructures, and major upgrades are necessary in order to operate like a large private company or a public company. Collecting diligence materials can illuminate missing documentation or faulty processes, thinking about accounting disclosure can refine how you recognize revenue, and the act of outlining your business section can refine the way you think about your business.
In order to have a smooth IPO and avoid delays while managing risk, we recommend focusing on these three main areas prior to or early in the IPO process. We are happy to discuss the differences to help you make an informed decision. Subscribe or Follow.
Preparing a Successful IPO in 2018
Glassner Bruce H. Goldfarb Joseph Hall Jason M. Heineman, Jr. Harvard Law School Forum on Corporate Governance and Financial Regulation All copyright and trademarks in content on this site are owned by their respective owners.