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You're being courted by a company...

To join as their CxO. The job seems ideal, they are wining and dining you. The offer is light on cash and heavy on stock and options. They aren't public, and if they were to go public it wouldn't be for a year or two and at least a million they claim they don't have. The stock and options if fully exercised still make you a minority owner. Do you take the job and gamble? Is their an age bracket where you take the job and gamble or another set of parameters one should look at that may change the landscape and the job's stickiness factor?

Answers

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

For me, it is about the (1) CEO (personality and track record), (2) his vision for the company, (3) if you believe in product/service and business model (or if you are ok with pivots), and the most important thing.....(4) the runway. I will just make sure that the "light on cash" will be enough for you to live on. The stock options also should be double triggered and fully diluted (if possible).

I don't really care too much about the IPO target date (if any). The past year and a half, I have been kind of "discouraging" entrepreneurs from going public or at least convincing them to prolong being private. .If there is NO compelling reason to go public, then they should not. If they don't need to exit, and their growth funds can be be sourced through revenues or other means, then IMO they should remain private. Liquidity needs for existing shareholders can be satisfied through other means. The hassle and pressure of going public is just not worth it.

But more importantly, the more you stay private, the more you can FREELY work on your revenues, margins, policies, etc. which would in turn give you more value prior to the IPO.

Anonymous
(Chief Financial Officer) |

I know Wayne mentions IPO but a liquidity event doesn't have to be an IPO. There are so many hassles these days with being a publicly-traded firm that selling to another firm can be far more attractive.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Anonymous, you are absolutely correct. Most companies try to lure you with the "IPO", selling to someone else is an exit strategy that usually benefits the ownership, not the senior exec's in my experience.

Mark Matheny
Title: VP - FInancial Planning and Analysis
Company: Novolex (formerly Hilex Poly)
(VP - FInancial Planning and Analysis, Novolex (formerly Hilex Poly)) |

I am not sure it is about age, but rather where you are on you career timeline. If you are still planning to work for a few more years, I would ask myself if it was a job I could get passionate about and if I felt good about the team. It doesn't seem like you see any warning signs of impending disaster.

Topic Expert
Mark Richards
Title: VP of Finance & Operations
Company: RBA Consulting
(VP of Finance & Operations, RBA Consulting) |

One element of the answer lies in your risk/reward profile and how comfortable you feel that you can exercise control to help raise the capital and make the options worth something. This gets down to who you are and what fits you - many folks have joined these firms, only to exit within a relatively short time once they realize it's not what they truly want. I've seen it a few dozen times.

When it comes to future predictions, I agree with Emerson, the timing to have an IPO is a significant mix of factors coming together - so while their desire of 18 months (or whatever number) is interesting, being realistic that they cannot truly control is relevant.

As Plan B, a strategic buyer may be a better option than an IPO - may be a different model to get your equity out (in whole or part) - but much less complex and if you want to stay with the business, the cost of going public will not drain you of needed cash for growth.

Regards,

Mark

George Schaefer
Title: CFO
Company: Soltage, LLC
(CFO, Soltage, LLC) |

Regarding age - I was 55 when I was the Treasurer of a Fortune 500 company. We had just completed a $5 bn acquisition and a $10.2 bn recap of the company. I had been with the company for just over 4 years when I was approached to become CFO of a start up. Typical package - a cut in base compensation with lots of up side.

I took the chance and it paid off In spades as we went through the IPO process 6 months after
I joined and then we
were acquired 6 months after that.

I walked away with the equalvalent of 8 years of my Treasurers' comp and 2 months later was CFO of another company, a position I would here never would have been
considered for if I did not have the CFO title on my résumé.

Age is not a factor, the question is your tolerance for risk and reward.

Anonymous
(CFO) |

I somewhat disagree about age. Hopefully with age comes wisdom.

At least in my experience, living near the SV which is the heart of these types of ventures, you will need to dedicate your life to the organization and, too frequently, live like a college student in a dorm.

That's fine when you're an ambitious twenty something and have time in life to make up any setbacks should the IPO fail or not materialize, which is more likely than not. But, when you're in your fifties, you won't have time to make up for it and risk taking is....more risky. And, there is that lifestyle thing. Free pizza and beer and sleeping under my desk as a reward for my unwavering commitment to the corporate mission was fine in the 1980s right after I got out of college. But I have no desire to repeat that now. I highly doubt that most of my age group would. Despite what they might say in response to dreams of IPO riches.

I can't speak for everyone but, after a long career that included a couple of bouts of un/underemployment spanning a couple of years, I value security - if there is such a thing - more than I ever have.

My driving fear these days is outliving my money. I don't want to end up being a ward of the state as some of my much older friends have, despite their having set aside rather generous amounts of wealth to see them through retirement.

"If you're not a liberal when you're 25, you have no heart. If you're not a conservative by the time you're 35, you have no brain." - attributed to Sir Winston Churchill

George Schaefer
Title: CFO
Company: Soltage, LLC
(CFO, Soltage, LLC) |

Dear Anonymous - as I said in my last sentence, it depends on "your tolerance for risk and reward ". I think we are in agreement, I did not say every 50+ y.o. Should take the opportunity, only if you and your family can tolerate it.

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

Emerson really nails it in my opinion. It becomes about your own personal goals as well. Do you see yourself intrigued by their business model, have faith in their goals and direction and believe you can have an impact? Of course if you can make your finances work with the initial offer, sounds like an amazing thing to be a part of.

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