In the last 18 months we have had five separate CFO briefs where the client insisted on prior IPO experience as a must-have requirement.
One of the five businesses ended up going through an IPO. Two are still private, one did a trade sale, and one recapitalised and stayed private. That is a 20 percent hit rate on a requirement that measurably narrowed the market.
What the requirement actually cost
Three specific costs, all real.
A materially smaller candidate pool. IPO-experienced CFOs are a small subset of the wider senior finance market. Requiring prior IPO experience typically cuts the addressable pool by 70 to 80 percent.
A pay premium of around 15 percent on base. IPO-experienced CFOs know their scarcity value and price accordingly. On a £180k CFO seat, that is roughly £25k a year the business is paying for a capability it may not use.
A longer search. The narrower pool takes longer to work through properly. We typically add three to four weeks to a search timeline when IPO experience is a hard requirement.
None of these are fatal on their own. All of them are relevant when the requirement turns out to be theoretical rather than actual.
Why boards ask for it anyway
Two reasons, both understandable, neither quite right.
First, IPO experience is a proxy for capability. Boards see it as a signal that the CFO can operate at a level of institutional rigour. That is often true, but there are other proxies that carry similar weight without the same premium.
Second, boards want the option value. If the business might list at some point in the next three years, having a CFO who can lead that process feels like insurance. Insurance is worth paying for. But the premium on this specific insurance is high and the probability of claim is low.
The better spec
For most mid-market CFO briefs where a listing is not on the immediate roadmap, the better spec is not "IPO-experienced." It is "prior investor-facing experience at pace."
That includes:
- CFOs who have led investor updates in PE-backed businesses through a fundraise or refinancing.
- CFOs who have handled buyer diligence in a trade sale process.
- CFOs who have run direct communication with a lender or insurer through a covenant renegotiation.
- CFOs who have presented at industry investor conferences on behalf of their business.
All of these are legitimate signals of the underlying capability the board is trying to hire for. All of them come from a wider pool. None of them carry the IPO-specific premium.
When IPO experience is worth insisting on
Two scenarios.
First, when there is a genuine listing on the 24-month roadmap that has been discussed at board level and is more than aspirational. If the business has appointed an advisor, has begun early sponsor conversations, or has a clear window in mind, the requirement is real and worth paying for.
Second, when the business is late-stage private and the buyer universe realistically includes a listed acquirer. The buyer-side dynamics differ enough that CFO exposure to that environment is worth the premium.
In both cases, IPO experience is a legitimate first-tier requirement. In most other cases, it is a proxy that costs more than it delivers.
The question to ask before writing IPO experience into the spec
One question, honestly answered by the board.
If we are still private in three years' time, will we regret paying the premium for IPO experience we never used?
If the honest answer is yes, keep the requirement. If the honest answer is no, drop it and specify investor-facing experience instead.
If you are drafting a CFO spec now and want to think through whether IPO experience is genuinely needed or a proxy for capability, get in touch.
