The IPO-Ready CFO

The IPO-Ready CFO

There’s more than one way to secure capital for operational expansion. Going public may sound like the best way to leverage growth, but unless your company staffs a CFO with the myriad talents, an endless supply of energy, and a persuasive personality it takes to spearhead such a dramatic transformation, it’s likely headed for “break” instead of “make.”     

An IPO, then, is only as good as the CFO behind it. After all, the CFO’s inventory of the financial and operational infrastructure of the company in question is what auditors scrutinize when advising prospective investors. It must conclusively convince tomorrow’s stakeholders that a functional, profitable, and sustainable public enterprise can be built from the integrity of the CFO’s framework. 

A Critical Commodity 

With concerns over the pandemic waning, IPOs are enjoying an upswing. According to IPO Stock Analysis.  2021 logged an all-time IPO record, with 1,035 companies going public, beating the previous mark of 480 recorded in 2020.

If 2022 is to best the new milestone, war may well break out over IPO-ready CFOs. The empirical contention is that a company’s leap from private to public is largely predicated on the caliber and character of its financial figurehead. But while these kinds of CFOs may be a critical commodity, they are scarce. The business options of taking on investors entails a wide swath of competencies outside the preview of a garden-variety CFO.

The IPO-ready CFO should…

Be prepared – To use naval parlance, “the hatches must be battened before entering the fray”. The systems, controls, and the personnel required to make the transition from private to public sectors must all be in place at least twelve to eighteen months prior to the transition. Otherwise, the company in question risks a vote of non-confidence from the investment bank. 

Be transparent – There’s a lot of appeasement to be done when going public: IPOs, direct listings, and SAPCs require a full operational and financial X-ray of the company in question. It’s the CFO’s responsibility to ensure that a veritable history of audited financial data, as well as irrefutable evidence of the company’s ability to consistently meet performance targets, must be available whenever deemed necessary by the prospective investors.

Be accountable – A company may not yet be a publicly traded entity but its CFO should already have reporting processes in place that will accommodate the change. Going public shapeshifts such CFO responsibilities as risk management, forecasting, corporate governance, and reporting. The IPO-ready CFO needs to be ahead of the curve to ensure a frictionless transition to these duties.   

Be communicative – The IPO-ready CFO is not just a CFO—he or she is a storyteller, one with a firm understanding of the company’s narrative and an actor’s knack for making it feasible to an audience. That narrative may start with financial data, but it should include a comprehensive catalog of co-considerations, from KPIs and biographies of board members to the finer points of policies on diversity and sustainability. A public debut is in the making—knowing the script is imperative.

IPO, CFO, and IR’s

Just as a company requires the right CFO to go public, companies must matchmake for the right investors, then engage with them accordingly throughout the lifeline of the listing. Otherwise, Investor Relations (IR) can be a complicated and costly affair. This daunting selection process begins with the CFO’s keen sense of observation. 

When screening investors, the IPO-ready CFO must…

Narrowcast the investor base – A CFO’s first responsibility when lining up prospective investors is determining what type the company realistically requires. Is the right fit the “steady return” variety or the more adventure “long game” persona? Wonky acumen on the part of the CFO can lead to situations that can have a dramatic impact on the stock. 

Make a convincing thesis – Now that the CFO knows their potential audience, it’s a question of preparing an investment thesis that will qualify leads. This is more than a matter of numbers. Historical data is essential, of course, but the stock market is run by optics; if investors can’t be brought to see the rewards along the roadmap, they’ll put their capital elsewhere.    

Be report-ready – It’s the CFO’s responsibility to put in place the intelligence infrastructure required to track a company’s performance and to target industry and/or market developments that can augment or devalue the stock. Potential stakeholders need to have confidence that a secure systemized process has been established that will facilitate the provision of key data and other relevant information over the history of the listing.    

Create contingencies – If the pandemic has taught businesses anything, it’s the importance of anticipating a negative event. The CFO must strategize and embed safeguard measures protecting the integrity of the game plan in the event of grand-scale economic turbulence. COVID-era investors demand no less. 

Create a frictionless environment – Part of ensuring a return on investment is sound internal governance. Investment of capital is predicated on confidence in a company’s entire back office, knowing that a frictionless foundation is in place that will not be threatened by the added regulatory, legal, and behavioral responsibilities that come with a company going public. If the CFO can assure investors that the company is “all-in,” they’ll be “all-in.”   

The IPO-ready CFO and Grayhawk Search  

As stated earlier, finding a CFO with all the right quivers in his or her arrow to take a company public is a needle-in-a-haystack scenario. Only Grayhawk Search, with its exemplary record of procurement and placement from the international financial talent base, can supply companies on the IPO trajectory with the experienced, versatile, and persuasive IPO-ready CFO. Make-or-break the required transformation.  

Going public is risky, complex, and all-consuming. Make the process easier by talking to Grayhawk

Grayhawk Search –We’ve got the CFO for your IPO.

Luke Clare