I met with a new client this week who is the CEO in a very exciting technology company that is initiating a CFO search. The company is on a path towards an IPO, so this was a large focus of our conversation.
My client is very experienced, having brought a couple of companies public and sold another. When we discussed priorities for the CFO role, my client specifically dismissed IPO experience as not being that important. Instead, he stated that he wants a person who had run a successful, growing, publicly-traded technology company as CFO, or as a number two finance person in a larger organization.
During our conversation my client received an urgent text about his daughter’s upcoming wedding. He broke off our meeting for a few minutes, then shared what was going on. A light bulb went on for both of us as we realized that a wedding is a lot like an IPO!
A wedding is a big event. The best ones are well planned and managed by a host of people with a really good coordinator in the middle of all the moving parts. Being married is a lot of work, largely around agreeing on expectations and then living up to them. An IPO is a big event. Being a publicly traded company is a lot of work. The big challenge of a company looking to succeed is around setting expectations for future results and performing to those goals.
When it comes to a CFO hire, I agree with my client that placing a lot of importance on “event” (i.e. IPO) experience is the wrong way to go. Actually, the skills that successful CFOs have acquired along the way can be transferred to running an IPO. Instead, emphasizing experience running a complex business over many quarters of meeting and beating expectations in a public company is a much better filter for future success. The qualities of successful public company CFOs have to do with their ability to accurately read the tea leaves of their businesses and communicate effectively to their shareholders as to what they can expect in the short, medium, and long term. In one word— predictability. Similarly, the most successful marriages are based on understanding the needs of your partner and good communication.
When I meet a CEO who is intent on hiring a CFO with IPO experience it is usually a CEO with less experience or no public company experience. As a search consultant my job is to find what they want, for sure. But is also to help educate them about the role the CFO plays in an IPO, which is in fact a lot like a wedding planner. It is critical for the event to go well. It is like running any other event, financing, or project. Like a wedding, the planning process involves a host of talented individuals: bankers, lawyers, accountants, and IR firms, and the CFO is the central coordinator.
Even in a private company fostering a culture and systems to support predictability are essential. The many elements that go into having a predictable business model could also be useful in a successful marriage. I think I’ll leave the further analysis of that to the marriage counselors though! That said, going on 30 years in my own marriage I think I know a thing or two…so while I am not in the marriage business I am in the business of “finding exceptional CFOs.” If you need help finding one, contact me, Dave Arnold, at moc.srentrapdlonra@evad or call 408-205-7373.