When a company has to yank its IPO – whether because of market conditions, insufficient demand or any other reason – there’s more at stake than the sunk costs of preparing an S-1. Some of its senior talent may be at risk.
According to FT.com, failing to pull the trigger can ‘result in personnel changes, especially at the top.’ In the CFO position, for example, an employee hired specifically to help the company march to a liquidity event ‘may not be motivated to stay.’ The same can be said of a high-profile chairman.
Have a plan. If your IPO aims are headed south, you need to engage with your flight risks to make sure you can keep them on board. Find out what it will take to keep them around, especially if your IPO plans are being suspended rather than ended. Also, it’s smart to have a backup in mind. Know how you’ll deal with the defections that follow a failed IPO attempt. Remember: your clients are expecting business as usual the next day. So are your employees.
There are plenty of risks to consider when stepping into the IPO pipeline, and this is but one more for you to consider. In a volatile market, it could be the one that sets you up for a future IPO.
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