Initial Public Offerings were hot commodities in the early and mid oh-oh’s. Most finance leadership reading this blog remember those days well, and some of you did very well financially because of it.
The recession that occurred towards the end of the last decade put a stop to that IPO train. Companies needing capital for growth had to look elsewhere, and many companies were unable to succeed because this driver of growth dried up.
For the past few months I have been hearing the rumble of the oncoming IPO train. A number of CFOs I have spoken with in the past months have shared with me that they are being given the strategic responsibility to be ready for when the IPO market comes back. There is a feeling of cautious optimism that this catalyst for economic growth will soon be back.
How can a CFO prepare for the talent challenges to come?
One of the biggest challenges that an uptick in the IPO market will face is that there is a small pool of talented mid-level professionals with relevant and recent IPO experience. The amount of work needed to be IPO ready is significant. When the IPO dam breaks, many companies will be rushing to get their IPO done. If the talent challenges are not planned properly, companies will have to be more reliant on expensive external resources (think audit and law firm rates). Companies who properly plan for their talent needs in advance will be able to go public earlier, which could be very beneficial as well.
Another significant challenge to companies that are currently private is that the cost of being public is expensive. A CFO needs to ensure that they have the leadership and professionals on staff that can deliver the quantity and quality of timely and correct information necessary to be considered a well-run public company. CFOs bear the burden when their finance team is not able to deliver accordingly.
CFOs who have been mandated to prepare for an upcoming IPO by their board need to have a talent plan to ensure they can meet their needs for going public and staying public. This plan for talent acquisition, development and retention is necessary to balance the costs of going public and staying public.
This talent planning business will not be easy. But those that start planning now will be at an advantage.
CFOs, get ready. You could be in for a very bumpy ride on the IPO Express.
CFO furthermore will need time to construct out the team and schemes to support public business demands.