What Going Public During The Pandemic Taught This CFO

Vertex’s John Schwab on how to conduct an IPO in even the toughest environments.

Vertex CFO John Schwab

John Schwab, CFO at Vertex, a tax technology and services provider based in King of Prussia, Pennsylvania, had quite a year: the company went public at the height of the Covid-19 pandemic. Good communication, particularly with potential investors, is critical before an IPO—and obviously, plans had to be recast.

Despite a shift to virtual road shows, remote work and an increased dependence on technology, Vertex had a successful IPO in July 2020. We spoke with Schwab about the Vertex experience and how the IPO process has changed.

How was the IPO process different during the pandemic? What were some of the pros and cons?

With 480 companies going public, the U.S. stock market hit a record in 2020, which shows that businesses and markets successfully adapted to the new way of operating.

Communicating with the investor community is one of the most critical initial steps when preparing the company to go public. Because of the social distancing requirements, Vertex had to pivot to a virtual roadshow. This came with the challenge of making connections across screens and articulating the company’s value concisely. On the other hand, the typical weeklong, cross-country series of events was shortened to only a few days. There was no extensive travel and no last-minute schedule changes. The process was more direct, with efficient engagements between bankers, analysts and lawyers. We experienced less small talk and more of a get-down-to-business attitude from everyone.

All activities involving multiple teams—from engaging investors and public relations partners to drafting announcements, prepping spokespeople and planning media outreach—had to be coordinated remotely. When the pandemic restrictions just started, not all companies had the communications and collaboration tools required to support a fully remote workforce, which could be a roadblock when trying to navigate such a pivotal business operation as an initial public offering. We were fortunate to have the technology, infrastructure and people who pivoted to remote work within a week.

At the end of the day, a virtual IPO process made it possible for all Vertex employees to participate in the bell ringing ceremony with the celebration and anyone could take advantage of streaming their photo on Nasdaq’s digital billboard in New York City’s Times Square.

What tasks were involved in taking your company public?

The first step was to make the ultimate decision to go public, which our leadership team determined in mid-2019. After being a privately held company for 40 years, this was not a decision that the board and senior leadership took lightly. We believed going public was necessary to give us more access to capital to finance investments in Vertex’s offerings, technology and sales force.

Once we made that decision, we carefully engaged new legal counsel and accountants, and selected underwriters. Those decisions required careful considerations of the candidates’ IPO experience, understanding of our industry, reputation and more.

We then worked closely with the banks to develop a presentation for investors. The brunt of the pandemic hit in March 2020 while we were preparing the SEC Form S-1. To ensure all information and disclosures were correct and presented properly, Vertex assembled a cross-functional leadership team that included representatives from every department.

In the meantime, the communications team worked on media relations and a social media strategy that included drafting a press release, building a priority list of target media and, most importantly, preparing spokespeople to maximize each media encounter to reinforce the company’s leadership position in the market and growing value.

Each company with an IPO ambition must have a unique business proposition and be able to craft a compelling story to attract a broad investor base. This process was managed in two phases, starting with “testing the waters” meetings to obtain some early feedback from the investor community, which informed the final presentation. After approval from the Securities and Exchange Commission, which involved a description of our business operations and management, our price per share and other factors, we began the virtual roadshow to officially offer the chance to invest. Vertex officially opened on the Nasdaq on July 29, 2020, with a 21.2-million-share IPO.

What is your advice for other CFOs preparing for an IPO, especially as remote work and virtual road shows will likely continue for the near future?

Getting ready to take a company public is an extensive process that requires a lot of preparation and coordination with outside lawyers, accountants and bankers. It’s even further complicated when team members cannot be physically together. It is a CFO’s responsibility to create forums to communicate important information and encourage an open dialogue. You have to clearly define roles and responsibilities for everyone involved and set aside time for development of the business case and rehearsing.

There are fewer opportunities for non-verbal cues in a virtual setting, so preparation and testing are critical from both the technology and spokesperson perspective. You need to ask yourself certain questions to prepare. Are you comfortable with using the communications platform you will be relying on to connect with investors? Have you gone through basic speaker training? Do you know how to effectively convey key talking points?

The IPO process requires a significant amount of fact gathering and compiling a wide-ranging amount of data. The ability to review results and make information available on a real-time basis in terms of growth, productivity and profitability is tremendously important. Consistent and accurate reporting is a key tenant of any publicly traded company and ensuring the automation of current financial processes can help organizations stay ahead of the challenges as a public registrant.

Going public is a monumental step in a company’s evolution and this process may seem daunting to do virtually. But as long as you prepare diligently, surround yourself with great advisers and have a solid management team in place, it can be done successfully in a remote environment.