John Baule, CFO, ChannelAdvisor Corporation shares insights on how this leading provider of cloud-based e-commerce solutions successfully prepared for and transitioned to life as a public company.
How would you describe the process of preparing to go public? How did you feel the day the registration became effective?
The process of going public was exhilarating. I was leading a group of highly motivated individuals focused on one very clear-cut goal. The process from start to finish is a lot of work, and there is little ambiguity with regard to what milestones need to be met along the way.
After the ChannelAdvisor team rang the bell at the New York Stock Exchange on May 23, 2013, my first thought was that I was ready for a very cold beer!
What was the biggest surprise or challenge in preparing for an IPO?
The coordination of various teams was the biggest challenge in preparing to go public. Managing your internal team must remain a priority to keep day-to-day business operations running smoothly. However, you are now tasked with simultaneously managing bankers, auditors, tax accountants, valuation specialists, lawyers, and investor relations firms.
When in the thick of preparing for an event as multifaceted as an IPO, it is amazing how seemingly minor matters—such as the valuation of preferred warrants—can quickly escalate into gigantic issues. It is imperative that the right people and processes be put in place early on.
What role did outside advisors play in helping your team prepare?
MorganFranklin Consulting was an invaluable partner in helping ChannelAdvisor go public. What made the MorganFranklin team especially valuable was their help coordinating the going public process, as opposed to being another party that required coordination. I would describe them as an extremely proactive and real partner.
Was there a pivotal moment when you felt like everything would fall into place?
When the ChannelAdvisor team made it to the printers and we completed our first confidential filing, I felt like everything would fall into place. At that pivotal moment, I knew we were in the clear to have a successful IPO.
What has been the biggest adjustment to life “after the bell rang”?
The quarters seem to come quick and hard, with a number of additional tasks layered on. Press releases and earnings call scripts add to a growing list of public company responsibilities and, in spite of increased duties and shortened time frames, you can’t lose sight of your day-to-day responsibilities of running a successful business. After six to nine months of laser focus working toward a successful IPO, you are forced to reorient yourself to the perpetual nature of growing and improving a business.
What advice would you share with companies considering an IPO?
- Get your advisors in place early. Excellent resources are available to help the Chief Financial Officer in preparing to go public, but you must engage them early in the curve. You almost need to engage advisors before you need them. This way they are adequately prepared when you are ready to hit the ground running.
- Get your audits, quarters, and 409A valuations locked down early. It is important not to underestimate the time it can take to compile these.
- Take time to select good attorneys; they are critical to the process. ChannelAdvisor engaged Cooley LLP and they were right there in the trenches.
- Most important, your board and senior management need to be unambiguous in their intent to go public. The process of going public is a slog; it’s trench warfare. You have to be committed to getting there no matter what.
1 Alistair Barr and Tanya Agrawal, ChannelAdvisor Soars in Debut, Thomson Reuters, May 23, 2013, http://reut.rs/1tVm7q8
2 Google Finance, March 31, 2014, http://bit.ly/1mHkgkN