Recruiting an IPO CFO

The IPO market has turned around from its pandemic drought that set stocks into a free fall across multiple industries, including tech. After several years of disappointing IPOs, the markets appear to be turning with entering public markets once again becoming a priority for companies in search of capital liquidity and exposure.

Taking a company to its IPO is not a short-term task or one that can be completed within a six-month window. Most CFOs view an IPO as a two-year process, including restructuring the company in its pre-IPO stage to ensure a seamless transition, bolster investor relations, and develop a regulatory framework.

It’s why companies turn to a CFO to lead the project, particularly those with a CEO that lacks prior IPO experience.

CFOs with experience working on IPOs know how to communicate with stakeholders, implement a pre-IPO strategy, and prepare the company for the realities of going public. It’s why CEOs and private equity investors put a premium on CFO candidates with a successful IPO on their portfolio.

These CFOs take a more holistic approach to an IPO, understanding the workload and developing a schedule that incorporates achievable deadlines.

CFOs with IPO experience will offer a fresh approach to the company’s finances and operations while being prepared to ask difficult questions. The appointment of a CFO will also boost investor confidence and give the company more credibility with financial institutions.

Not every CFO will have IPO experience and it isn’t always the most desirable trait for candidates. Public affairs experience can be just as useful. CFOs will build a finance team around them with varied backgrounds, including other financial executives with experience at public companies and working on IPOs.

At FD Capital, we recruit and headhunt IPO CFOs throughout the UK. Our tailored approach to recruitment means we work with clients to identify the skills and experience they need from their candidate to deliver a successful IPO.

The Alternative Investment Market (AIM) is a sub-exchange within the London Stock Exchange, designed for small but high-growth companies keen on raising capital to enable expansion. It currently has over 800 listings, including a range of pharmaceutical, technology, and finance companies.

Our talent pool of CFOs with IPO experience includes experts in navigating the AIM market. Companies aiming for an IPO on London’s AIM will value a financial executive with experience in this listed environment.

We don’t recommend excluding CFOs without IPO experience from shortlists. The number of CFOs with experience leading and delivering an IPO is limited, giving you a smaller pool of candidates to work from.

Research shows that most companies show that while prior IPO experience is desirable amongst CFO candidates, it’s not viewed as a necessity. CFOs who have worked for a public company after an IPO can still bring valuable experience and a fresh approach to an organisation preparing for its initial public offering.

The IPO process is well-documented and relatively prescriptive, allowing an experience CFO to quickly come to terms with what it entails. A CFO who has not personally delivered on an IPO will likely recruit other members of their finance team who have experience working with public companies pre-IPO.

There is no exact time frame for when you should hire a CFO to oversee your IPO. However, we recommend starting the process of recruiting an IPO CFO as early as possible. Taking a company to IPO is a massive undertaking and will require internal restructuring, external auditing, and developing investor relations.

Your CFO will need time to implement changes during the pre-IPO period and put systems in place to enable financial disclosures and ensure that the company will be able to meet its regulatory requirements.

Most CFOs who have been through the IPO process will say that it takes several years to put the correct people and systems in place. We recommend recruiting your CFO at least two years before your intended IPO. This time frame provides time to invest in human capital, establish systems, and implement reporting and forecasting to prepare the company for going public.

Your company is more likely to have a successful IPO and stable valuation when the right planning is put in place. Rushing to an IPO and recruiting a CFO with only six months’ notice won’t allow for processes to be implemented and structures to be adapted to put the necessary controls in place to be validated by external auditing.

Don’t just consider the IPO process when recruiting a CFO. The right CFO will put the systems and structures in place to streamline your company’s transition into a public company. An IPO isn’t the end goal. It’s the start of your company’s life as a public entity.

The final months of planning before the IPO will focus on ensuring the first quarter of your company’s time as a public company goes smoothly to bolster investor confidence. Delivering the IPO is the first step. Acclimating the organisation to life as a public company is the second step.

Identify the skills and experience you want from a CFO when your company goes public. Investor relations, their network of financial institutions, and the ability to work in unison with the CEO are crucial.

Once your company goes public, your CFO will spend more of them on the road and less of it in the office. They’ll be responsible for communicating the company’s vision and translating its finances to would-be investors.