Looking to IPO? 3 Insights from the Connor Group’s Bay Area IPO Summit

On October 17, a Silicon Valley ballroom buzzed with energy as finance leaders gathered to discuss something Silicon Valley does best — transforming private companies into public powerhouses.

At the Connor Group's 2024 Bay Area IPO Summit, CFOs, controllers, and finance VPs converged to explore the current market's appetite for new public offerings and navigate the complex path to IPO. Here are the key insights from the day's panels and discussions on everything from public readiness to AI adoption and capital markets.

Insight 1: Accounting is the cornerstone of the IPO journey.

The day's most emphatic message came through clearly: accounting serves as the "long pole in the tent," as Aeva CFO Saurabh Sinha put it. Sinha, who led Aeva (NYSE: AEVA) to its public debut in 2021, emphasized that accounting teams should prepare for intense scrutiny throughout the IPO process.

"Are you closing the books as if you're a public company? Are your auditors auditing under the public company standards?" Sinha challenged the audience, noting that companies cannot even file registration statements without audited financials.

Jim Neesen, Connor Group Managing Partner, reinforced this point, warning that public audits typically require 50% more work than standard AICPA audits. The message was clear: while IPO dreams may culminate at NYSE or NASDAQ, they begin in the accounting department.

Insight 2: AI is No Longer Optional

"Any company going public needs an AI story," declared Ryan Limaye, Managing Director & Co-head of Global Technology Investment Banking at Goldman Sachs, during the day's opening fireside chat with Lise Buyer, Founder & Managing Partner of the Class V Group. Buyer emphasized that even non-AI companies must articulate their AI strategy when preparing to go public.

A subsequent panel on "AI Adoption and Its Transformation of Business" offered practical applications for accountants, featuring accountants & Controllers from OpenAI, ScaleAI, Amplitude, and Klarity.

Alex Gee, Head of Technical Accounting & Reporting at OpenAI, offered some gems, mentioning that AI was ideal for writing first-draft flux analysis as well as writing scripts to automate the creation of journal entries. For teams concerned about AI’s possibility of hallucinating, Gee putting AI-generated code through the same rigor and testing you would for any other form of code. By confirming that AI was producing the same outputs as any human, Gee was able to convince his auditors of AI’s utility and reliability.

When thinking about where to begin implementing AI, fellow panelist Mike Dean, VP Corporate Controller at Amplitude said that he asks junior accountants to mention their biggest pain points and then from there, they work with the engineering team to brainstorm AI solutions.

In Dean’s words, they start by asking: “What do you hate doing and what would cause you to quit?” This simple question helps teams identify where AI can add the most value.

Insight 3: Equity Management and Controls Demand Early Attention

Lindsay Gray, Interim CFO and SVP, Accounting at Grocery Outlet (NASDAQ: GO) took the company public in June 2019 as the then-VP Corporate Controller.

When asked what key lessons she would tell her past self before going public, Gray spoke to the importance of understanding and implementing an equity program far in advance of the IPO. In classic accounting fashion, the company was managing equity schedules in Excel spreadsheets before realizing that they needed to migrate these programs into a software for any chance at IPO-readiness.

As for other key changes, Gray shared a funny anecdote about waking up in the middle of the night and realizing that her team would need to change from ASC 840 to ASC 842 in the span of a month. As such, she recommends that teams really be in lock-step with accounting standards to avoid similar anxieties.

Additionally, she stressed the value of establishing strong internal audit functions and SOX controls, noting that while implementing these controls adds to the workload, they serve as crucial safeguards against material weaknesses.

Final Thoughts

The IPO journey is equally exhausting as it can be exhilarating. However, all panelists across the day agreed on a crucial point: going public isn’t the finish line. Teams typically have mere weeks to prepare for their first quarterly earnings report as a public company.

The summit, hosted by Connor Group, a Numeric partner, and led by Partner Ravi Kumar, provided valuable insights for companies considering the public markets. The key takeaway? IPO success requires meticulous preparation across accounting, technology, and operations — but the rewards can make the journey worthwhile.