Accounting

How to Build Your Accounting Team for a Successful IPO

Aug 27, 2018 Blake Oliver

The IPO process eventually brings an abundance of benefits to a company — not the least of which is an infusion of capital to fund growth. But it also presents new challenges. You’ll be dealing with increased scrutiny on finance and operations, so you’ll need to have associated controls, processes, and documentation in place. And you’ll need a skilled team to help you navigate these uncharted waters towards an upcoming IPO.

This team will include company executives, functional in-house players, and external experts and specialists. Both the composition of the team and onboarding timing are important factors. If your company has decided to go the public route, here’s what you need to know to assemble a team that can guide you toward a successful, upcoming IPO.

An Experienced CFO

The CFO plays a crucial role in getting a company ready for an upcoming IPO. Ideally, a CFO candidate will have prior experience with a public company, be well-versed in the financial metrics of the business, and be familiar with the company’s story.

Ryan Dillard, Director at ARC Consulting, a firm that specializes in helping companies to prepare financials for the IPO process, explains, “Having someone that’s been through the process is the best. Also, someone that really understands the company and really knows what the story is, what the metrics are, and the way it’s going be sold going forward.”

(Hear all of Ryan’s advice on assembling an IPO launch team in the video below.)

Alan Tekerlek, Managing Director at JMP Securities, an investment banking firm that focuses on taking high growth companies public by helping them raise money, agrees on the importance of the CFO. He says that investors tend to feel more comfortable working with someone that has gone through the process before, knows the potential issues that come with an IPO, and has the ability to communicate the finances in a very transparent manner.

Alan also recognizes that finding a CFO with this experience can be difficult. He shares that one of the most productive ways of producing available talent is mergers. “When the acquired company fully integrates with the one doing the acquiring, their CFO position is typically eliminated, freeing that individual to fill a new position at another company.”

(Hear all of Alan’s recommendations in the video below.)

Characteristics to Look for in a CFO

While your CFO doesn’t need to have all of these qualities, the following characteristics are common in CFOs with successful IPO launch track records:

  • Previous IPO and Public Company Experience — When a CFO has previous experience dealing with an upcoming IPO, he or she is best suited to facilitate the process for your company. Experience is also an appealing asset for investors during the offering and after the IPO process takes place.
  • The Ability to Articulate the Company’s Story and Value — The CFO should know the company’s story, have a clear understanding of the company’s value proposition and financial position, and should be able to clearly communicate them.
  • Organizational Longevity and Legitimacy — Your team must have confidence in the CFO. You’ll want to hire the individual that will fill this role in advance, allowing enough time so he or she is able to mesh with the team and lead as a part of it.

A Skilled Controller

Often, the Controller is an existing team member who’s leading the IPO charge. If that’s you, you’re facing a new mountain of responsibilities on top of all your regular duties. To prepare for the work that lies ahead, here are some practical steps you can take not only to get yourself ready for an upcoming IPO, but also to increase your professional value.

How to Get IPO-Ready as a Controller

Give yourself time to increase your financial business acumen and technology skills. Here are three ways to prepare that will pay off significantly:

  1. Use LinkedIn to network with Controllers who have experience with IPOs. You’ll be surprised how many people are happy to offer advice and guidance based on what they learned through the process.
  2. Invest in individual skills development. The more up-to-date your skills are, the easier you’ll find the process. Do online research and take advantage of educational opportunities.
  3. Explore regional and national associations. While online networking and education is valuable, there’s nothing like meeting peers face-to-face and learning in a group environment. You’ll find educational and networking opportunities at these associations.

The Rest of the IPO Team

Typically, the Controller is responsible, or at least heavily relied on, to assemble the rest of the IPO launch team. The size of your team will depend on current staff levels, IPO timelines, and the required expertise. Ryan of ARC notes, “An average-sized financial team of five to six people typically will need to be expanded to ten to twelve in order to cover all of the bases needed for a successful IPO.”

Having the right people on board can make the difference between a streamlined launch and one that’s fraught with difficulties. Also keep in mind that you’ll need to give team members enough time to acclimate and begin working together as a true team. Getting everyone comfortable and making sure working relationships are optimized before embarking will simplify the process. Here are the roles you’ll want to consider:

Subject Matter Experts

Having the experience of people who have gone before and know the path you’re setting out on is invaluable. You’ll want to look at:

  • Auditors and analysts
  • Legal counsel
  • AP and AR experts
  • SEC reporting authorities

Specialty Consultants

Outside consultants can provide insightful perspectives and skills that you may not need long-term. These include people with proficiency in:

  • Tax issues
  • Technology accounting (including cloud accounting)
  • Reporting
  • Compliance

Team Building Tips

Don’t forget to add a heavy dose of reality to the team-building process. Nothing ever goes completely according to plan. These tips will help you as you’re preparing your team.

  1. Be honest about your team’s current workload and the amount of IPO-related work that will be required.
  2. Be realistic about the timeframes you’re targeting and the inevitability of surprises along the way.
  3. Motivate your current staff by clearly communicating the benefits they’ll reap from the additional effort they’ll need to contribute.
  4. Specifically delineate the responsibilities of internal staff, external consultants, and specialists.

While preparing for an upcoming IPO can be daunting, you can have confidence that you’re more than capable with the help of a strong team.

If you and your team are gearing up for the challenge of preparing for an IPO, download our Controller’s Guide to IPO Readiness: Critical Considerations for You and Your Team.

You’ll learn: