Who stays and goes in finance when the company goes private

Imagine you’re an investor relations analyst at the water cooler (or, let’s be serious, in a “brainstorming call” on Zoom with your work bestie) and you’ve just heard the first rumblings of an acquisition taking your employer private.

Take a deep breath. Your job may be safer than you think, and there might even be an opportunity for long-term career growth, experts told CFO Brew.

Investor relations professionals have some of the most in-demand skills in finance departments, including the ability to tell stories with financial data and quickly pivot as obstacles arise, according to Matthew Abenante, founder and president of Strategic Investor Relations, an investor relations consultancy, told CFO Brew.

Finance and legal department professionals above the manager level are usually the most vulnerable when a public company goes private, but are also likely to have months in advance to prepare, Abenante said.

“As an investor relations professional, you are intimately familiar with the negotiations,” Abenante said. “You understand that this is coming, and, usually, depending on the size of the transaction, any regulatory issues, and any other practical issues between the two companies, [it will take] several months to a year.”

Looking ahead. The process of going private is neither cheap nor easy and often includes a filing to delist shares from a stock exchange, such as the NASDAQ or the New York Stock Exchange and a separate SEC filing to terminate the company as a reporting company, according to Andrew Jennings, an assistant professor at Brooklyn Law School who previously handled mergers and acquisitions for Cravath, Swaith & Moore. This also means that, upon completion, certain responsibilities will be either obsolete or could be outsourced.

“You won’t have folks like an investor relations director or you probably won’t have an in-house securities lawyer anymore,” Jennings told CFO Brew.

Often, companies that go private but have bonds outstanding will retain their investor relations staff because investors still expect an investor relations program for bonds, Abenante said.

Entry-level employees, such as finance analysts, are often spared from layoffs in the public-to-private scenarios, but may be reassigned to other departments, such as accounting or financial planning and analysis, since investor relations is multidisciplinary by nature, he added.

Compensation packages for investor relations staff can include stock options and eligibility for an annual bonus based on their base salary, with more than half of those surveyed reporting base salaries of more than $176,000, per a study by the National Investor Relations Institute and Korn Ferry.

What’s your story? For those investor relations personnel who do lose their jobs, It’s not uncommon that they might set their sights on a CFO role, especially considering the two typically work closely together, with the investor relations officer often acting as the CFO’s “second set of eyes,” Abenante said. Many investor relations department heads come from a banking background or buy or sell side research, he added, giving them the ability to “grasp the financial aspects of a particular company in your industry.”

As CFOs become more of a strategic partner to the CEO, skills such as strategic thinking and storytelling—along with building a cultivated brand—appear to be growing in demand.

Tom Hood, executive vice president for business engagement and growth at the American Institute of Certified Professional Accountants, told CFO Brew that storytelling and strategic thinking were among the most in-demand skills for CFOs.

“That’s [storytelling] the No. 1 that we always hear,” Hood said. “The other one is strategic thinking because now the CFO is in this broader role of the business and he or she needs to be really good at strategic thinking and understanding the whole as opposed to the nitty-gritty detail.”

Zoom in. Balancing the technical skills of the CFO with the in-demand skills of the IRO, Abenante said, is “almost the yin and yang” of a successful partnership between the two.

“Working very closely with that CFO essentially puts them in position, as for many organizations, as the No. 2 for the role,” Abenante said. “They also know the company, counsel, auditors, board members, and the rest of the management team, so it’s much easier to go in that direction.”—LR