The Team For A Micro-Cap IPO

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For private companies that are planning a micro-cap initial public offering (IPO), a strong executive team and board of directors will be critical. A well-positioned team can increase the value of the company and provide confidence to potential investors.

The right combination of skills, experience and strategic thinking will be needed, so it is crucial to understand the role each person plays. Teams do not always operate effectively while trying to cover a shortfall in personnel or leadership, and leaving a key role or area uncovered might show up in the company’s performance going forward. 

Company Culture

The pre-IPO stage of building a team is a unique opportunity to further shape the company’s culture and develop a strong foundation to guide the company’s growth.

Hiring for cultural fit is a critical factor to consider because company success can often be fuelled by attracting and hiring candidates who willingly share knowledge, ideas and experience to fit the company’s personality.

Giving priority to people who fit your company's culture can be key, and adapting best practices they've learned elsewhere to benefit your company can be an added benefit. As you build a team, you also need to encourage new people to think differently about their roles and contributions to the company culture.

Look not only for the basic breadth of knowledge, technical skills and demonstrated problem­-solving skills but also for great interpersonal skills.

The Board Members

When choosing board members pre-IPO, taking the time to selectively choose substantive members who can help shape the board for success could be powerful for success. Look for board members who have relevant financing expertise. While experience in a large-cap company can seem attractive, it may not translate into smaller company expertise. Individuals with knowledge of micro- to mid-cap financing can be vital when the company is looking for new or additional funding.

You may also want to ensure board members have an industry track record. Consider the board member’s experience — is it relevant to your industry? It can be crucial to have board members, especially for micro- to mid-cap companies, who are able to leverage their prior industry experience and provide counsel to emerging-growth firms.

Board members should have experience in public companies and corporate governance. Selecting board members who have a performance history with other public companies or experience with environmental, social and governance (ESG) policies can be incredibly helpful.

Finally, consider fully supportive board members. Look for those who share a personal belief in your company’s business model and management team.

The Finance Team

Establishing a solid finance team and accounting practices will arguably be essential to your success as a public company. In most early stage companies, the finance team has been hired to focus on basic bookkeeping.

However, as you prepare for the IPO, you likely will need to build your finance team to transition to a public company and meet the increased demands of Securities and Exchange Commission (SEC) reporting requirements. You might need to look at building the processes and systems necessary for scale.

Unfortunately, and too often, rebuilding your finance team is not a simple matter of replacing old employees as it requires a variety of skills to sort out the past accounting issues and set the stage to meet SEC financial reporting requirements.

Overlooked Hires? – Pre IPO

Marketing

Your marketing department will evolve with your business as it becomes public, which requires a different type of marketing talent to communicate your story to the financial community.

Developing and maintaining a persuasive and compelling equity growth story, as well as your management team’s credibility, is a unique skill and typically goes beyond traditional marketing.

The marketing department's task is to communicate these changes to the marketplace in a consistent manner with a timely and well-thought-out approach. The key to all of this is change, adaptation and evolution to maintain a constant assessment of your company’s awareness in the market, positioning and brand building.

High-quality pre-IPO marketing can be an important phase in the IPO process — and possibly the most exhausting phase for the management team.

Legal

An in-house general counsel can be a great hire to help lead the way through the SEC filings and all the new agreements that come with going public.

Having the right general counsel on the executive team who has SEC knowledge, understands contract law and is an excellent negotiator can end up saving time, providing efficiencies and reassuring key stakeholders and investors.

Recruiting

One of the great benefits of an IPO is that it can provide liquidity for employees and can be used in recruiting key people to work for a company before it goes public. As a company grows, it will require new skills and different experience from all its employees, so it should not be surprising that a company will undergo turnover at various levels.

You can mitigate the damage of a bad hire by continually recruiting and looking for better people, either inside or outside the company. If your business is always growing, you will always be hiring. Start developing recruiting processes early and identify specialized recruiters who can assist your efforts.

Find the Dream Team

Try to put together your dream team, rather than a team you need to force to fit into your company. The IPO process requires a well-oiled machine, and this will require a team of individuals who can work together for the success of the company. Ultimately, the changes the company will go through can be significant, and it will likely need a strong, knowledgeable team to guide the process.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.