The post-IPO checklist: Why going public is just the beginning

Taking a company public is a grueling marathon of planning, regulatory work, and calls with investors. So what do you tell a friend who’s about to reach this career milestone?

“Congrats! Now be ready for a lot more work,” said Steven Chan, CFO of Connect Biopharma.

Chan has been overseeing his employer’s post-IPO transformation after it went public two years ago, and he also has been part of three other IPOs, all through traditional listings, in the tech and biotech space.

And when the clang of the opening bell has faded, he said, the CFO has to be ready for a transformed job in a transformed company.

“Don’t look at it as the endpoint,” he said. “It has to be one of the early steps along what, hopefully, is a very successful journey for the company itself.”

Here’s your post-IPO checklist for the miles to come.

Break the stock-price fever. Everyone’s going to be watching the ticker price. True leaders can put that number in perspective, said Tracy Knox, who was CFO when Rover.com went public and is now a CFO advisor and consultant.

“A lot of time is spent managing the employees’ emotions around the stock price. We’re trying to refocus them on the business,” she said.

Susanna Morgan ran into the same questions when she took Remitly public as its CFO in 2021.

“If equity is a meaningful part of employee compensation, then they will likely look at the stock price, and decreases can really impact morale,” she said.

It’s another example of the CFO’s increasingly prominent role: financial storyteller.

“One of the pivots is spending more time on internal communications, and educating employees. ‘What do multiples look like over time? What are the drivers of the business, and what’s really happening?’” Morgan advised. “Internally, help people focus on what they control, and focus on the long term, rather than the external stock price.”

That can be especially difficult lately, with stock prices sliding and valuations constantly being reset.

Here’s how Knox put it: “You’re trying to bring them along in the journey, educate them, and tell the story of where we’re headed. That’s much of the job of the CFO.”

Focus on the beat and raise. There’s one thing the company can do about those pesky stock prices: Beat expectations and raise guidance.

“You really want to make sure that you can beat and raise the first few quarters out of the gate after the IPO,” Morgan said. “Watching the key drivers of revenue—like bookings, transactions, or retention of your large customers—is really important, while also keeping an eye on the expense base.”

For a software as a service company, that could mean closely tracking bookings and keeping the sales team focused on their goals. For a transaction-oriented company, it’s keying in on the volume that will meet the internal forecast, according to Morgan.

“The FP&A team should be working as business partners to help the business understand, ‘What is the forecast? And how are we performing against what we said we would do?’” she said.

The CFO can help deploy dashboards and other tools to keep teams on track, but it also comes down to leadership. Finance needs to set a regular cadence of internal updates to review key revenue and cost drivers, and the CFO has to drive accountability.

“[It’s about] knowing who is accountable for what, exactly, and making sure that everyone is on the same page,” she said.

Meet your critics. Going public means a new chorus of investors and analysts will be looking over a company’s every move, and the CFO will be a primary point of contact.

“Investors are typically not shy. I think the challenge is that they’ll always want more disclosures, and they’ll always want more information,” Morgan said.

It can be helpful to check materials published by comparable companies to understand the common disclosure practices in your industry. But it’s also on the executives to closely monitor and make judgment calls about what the company’s telling investors and analysts.

“You should never have investors focusing on a metric that you don’t see as meaningful or that you don’t track closely internally,” she said. “That could be a recipe for disaster.”

At the same time, sell-side analysts in particular can be a helpful communications conduit.

“If you see the sell-side analyst reports come out, and they actually are pretty good at predicting where your business is going and telling the story, then you’ve done a good job of communicating with them,” Knox said.

Analysts also can be a “megaphone” for broadcasting a message externally, while simultaneously providing meaningful information on the rest of the market, Morgan said. Going public is just the beginning of building relationships with them and with investors.

Be ready to raise. Given the shaky state of the overall capital market, a company’s public launch may not deliver all the capital that was expected.

In those cases, Chan said, the CFO will need to look at additional capital options, too.

“This could be with nontraditional forms of financing, it could be with debt, it could be with partnerships,” he said, adding that the CFO will likely be working with the rest of the executive team on a regular cadence to plan for this.

“It’s no longer, ‘Let’s do a strat plan once a year.’ It could be every three to six months that you’re looking at something very different strategically for the company,” Chan said.