If you received an email today announcing that your company has filed its S-1, would your recruiting team know what to do? Do you know what an S-1 is? From our experience, that email has been followed by, “YAY, we’re finally going public!”, immediately followed by panic inducing questions like, “what are we allowed to say to candidates?” or “how do we pitch a job opportunity if you can’t talk about the value of an offer?”
With the recent IPOs of Instacart, Reddit, Klaviyo, ARM, and Rubrik there’s cautious optimism about the current trickle getting stronger with more companies starting to consider transitioning to public markets. If you get caught unprepared, at best it’s a huge scramble for your team. Worse-case, it can create a big liability to the company if your recruiters aren’t fully armed with how to effectively navigate the many questions coming from candidates and external partners. So, while your company may not be filing at this moment, if it’s on the horizon in the next year or two, we’d suggest getting educated on the terminology, process itself, and how to lead your recruiting team through it.
Since IPOs can be a once in a lifetime experience, there aren’t many people to learn from that have first hand experience navigating the challenges of recruiting through an IPO process.
Our team has experienced the IPO process several times both as part of the confidentially disclosed team responsible for taking a company public and on the ‘surprise, we've filed our S-1 today’ receiving end of the process as well. We wanted to share some tips for preparing yourself and your team based on these experiences. If you want more detailed guidance, we recently put all of our learning into a guide to help recruiting teams navigate an IPO. It includes real examples and in-depth FAQs.
Prepare yourself:
There are several things you can consider doing now to prepare.
- Learn more about different paths to public markets (IPO, SPAC, DPO).
- Understand what’s involved during the typical IPO process - IPO readiness and preparation, confidential S-1 filing, public S-1 filing, quiet period, roadshow, pricing, IPO listing day, lockup period and blackout periods.
- Talk to leaders that have been through the process and learn from their experience before you’re thrown into the fire.
Here’s an overview of how we’ve seen the process play out:
In the lead up to filing with the SEC, the company will be preparing to go public by completing the necessary diligence and preparing financial statements, legal documents, and disclosures. Most of this will happen behind the scenes for recruiters, but there are specific things that will likely evolve that impact recruiting operations. Financial controls will become very important as a public company. For example, to minimize risk of fraud, it’s probably a bad idea for the person that creates headcount to also be able to create a job and hire someone into that job without approval, and start them on payroll. The company will need to document processes that demonstrate the proper oversight is in place to minimize risks - access controls, NDAs, background checks, approvals for headcount and offers, record of signed offer letters, compensation philosophy and guidelines, etc.
Once the filing is submitted to the SEC, the pricing of the stock will fluctuate and not be completely clear until the first trade happens on IPO day. The media will make strong cases for why your company will be great and why it won’t. Your recruiting team can’t comment on any of it. This can cause a lot of anxiety and uncertainty with you, your team, and candidates throughout the process.
Prepare your team:
Some new processes will likely feel more restrictive than they have in the past to mature the business. It’s also a path to the company’s stock having ‘real’ value, which may sometimes be worth reminding the grumpy members on the team about. Every business and IPO will have nuances in what needs to be communicated and when, which will be difficult to anticipate. For example, you may or may not be in the middle of university recruiting season where you’ve extended value-based offers. Your company may end up doing a stock split of some kind as part of the IPO process.
At each stage of the process, there will be new questions that arise, so a robust set of FAQs is critical for your team to reference. You could start to get guidance from your legal and comms teams on what their talking points would be for questions like how to talk to candidates about the equity value of their offers or how the team would respond to questions about press stories that will inevitably get referenced by candidates. It will be crucial to have a solid FAQ prepared and vetted with your legal team that your recruiters can reference during candidate calls! During the IPO process, you could take it a step further by putting in place office hours or collaboration spaces to give your team direct access to others to practice talking points and get quick feedback on questions that come up during candidate conversations.
Regardless of specific circumstances, your team can benefit from a basic understanding of the IPO process itself. It can also be helpful to have people on the team or in the company that have been through the process before to come share their experiences. This is a great step towards preparing your team.
This just scratches the surface. If you are looking for a partner to help prepare yourself or your recruiting team, our team has in-house experience leading teams through the IPO process at Facebook/Meta, Pinterest, and Airbnb. We have also helped recruiting teams navigate this process through our advising and coaching services. Let us know if you’d like to learn more.
Next month we’ll touch on building out internal executive recruiting capabilities. In addition to operational readiness, the company will also need to have the executive team in place with a strong bench of leaders to de-risk the business for public markets. Many companies will start to consider bringing executive recruiting in-house as part of the preparation process to ensure the company has sustainable capabilities to build the team for the long-term. We’re excited to share more on that next month.
