LiveVox, a San Francisco-based company that provides a cloud-based contact center platform, recently went public. CFO Gregg Clevenger talked with StrategicCFO360 about what CFOs of private companies need to consider when choosing to go public, the importance of expecting the unexpected and how going public changes a company’s culture.
LiveVox has been a privately held company for over 20 years. Why did you decide to go public, and why did you decide to go the special purpose acquisition company route?
Toward the back half of last year, we saw how the market opportunity was shaping up as more and more companies were moving to the cloud. In addition to the market opportunity, our products were doing very well and we thought the time was right to increase our investment in our sales and marketing efforts. In order to do that, we discussed the best ways to raise that additional capital. After internal discussions, and discussions with Golden Gate Capital, we agreed that as a publicly traded company we would be in a better position to invest in our sales and marketing efforts.
Once we settled on going the public route, we explored the different options and decided that a SPAC was the best choice for us. Not only would we get to work with an experienced and successful team like Crescent Acquisition Corp., but a SPAC also provided faster speed to market, flexibility and greater focus on business execution throughout the process.
How should CFOs prepare to take a company public?
Before making the transition, make sure you have a clear understanding of what it takes to be a public company. That includes what you need to have humming on the first day of trading and in your first quarter as a public company. Everything needs to be in order before that first day from the people and skillsets on your teams to the processes and systems you have in place and advisors helping you through the process.
Don’t be afraid to seek advice and counsel from as many subject-matter experts as you can gather and listen carefully to what you hear. Life as a public company is much different and the stakes are a lot higher. This isn’t a time to wing it; the more experts you can surround yourself with the better.
Additionally, ensure that you make an honest assessment of your gaps relative to the end-state goal and determine what it will take to fill those gaps. Then make plans and execute to those plans. Whether through a traditional IPO or a SPAC, the advice would be the same: surround yourself with smart people and expect the unexpected. There are probably few instances when all of those great plans you put together don’t get upset by things outside your control. Be prepared for that and be ready to adapt when those curveballs come at you.
You’ve served as CFO for both public and private tech companies. What do you see as the biggest differences between the two? Which do you prefer?
I think the biggest difference is how you communicate and who you communicate to. Obviously, as a public company you must have a particularly heightened sensitivity to what you communicate externally with a whole new set of legal and regulatory considerations that you don’t typically have as a private company. But that external communication structure and cadence also impacts how you communicate internally. What you can communicate to your employees and when, with regards to the financial and operating results of the company, as well as how your employees communicate with the company’s customers, prospects and vendors has to change when you’re a publicly traded company.
Educating employees about what they can and can’t do as a public company and guiding the inevitable shift in culture is extremely important and has to begin early in the process with buy-in and leadership from the broader executive team. As for me, I’ve enjoyed being CFO of public and private companies in a variety of industries and at various stages of development from pre-revenue startups with great stories to $500M-plus revenue companies with extensive global employee and customers bases. While they have all been very different, I’ve always found each to have their own set of opportunities and challenges that have been fun to tackle.
What are the biggest differences in communication at a public versus a private company?
Communication is one of the biggest differences as I mentioned before—both what you communicate and with whom. Public companies have a set cadence of what they can and have to share regarding the company. Besides regulatory bodies, public shareholders are one of the main groups you communicate with and they evolve as they trade in and out of the stock. When dealing with private companies, however, everyone is completely different both in terms of the information they are looking for and how you communicate that information. Managing communication around personalities is more important when you’re at a private company.
To sum it up, communicating as a public company is more formulaic and has more guardrails, while communicating as a CFO for a private company comes down to personalities and who is sitting on the board. It’s important to know those guardrails and who you can and can’t communicate certain things with when making that transition from private to public. Stepping outside of those guardrails can put you and the company in a tight spot.
On the financial side of things, for most private companies, you’re more squeezed for resources, so you have to do more with less. That often means that the CFO has to be prepared to be the subject matter expert for subjects they may not consider their purview. Public companies on the other hand usually have bigger teams dedicated to specific tasks. In either situation, however, it’s important to surround yourself with people who know what they are doing. What you report as a private company depends on the personalities and how detailed and extensive they need it to be and how much they want to dig. On the public side of things, however, you’re required to report certain numbers at certain times throughout the fiscal year. As you transition from private to public, it’s important to keep that in mind as financial reporting is one the biggest and most important changes for a CFO.