The Road to IPO, Bill Koefoed, Chief Financial Officer, OneStream

On July 23, 2024, OneStream went public on the NASDAQ’s worst trading day of the past two years. And yet it was a successful day for CFO Bill Koefoed and the team. Trading finally began after 12 years of building their finance management platform company. “The first trade was the magic moment that showed me we did it,” said Bill. OneStream launched at $17 to $19 per share, priced at $20, and closed its first day of trading at $28. At time of this writing, the company’s current market cap is $4.9 billion. 

OneStream’s IPO was three years in the making, impacted by a challenging macroeconomic environment and years of market hesitation. In an “ask me anything” conversation with CFO|Circle, Bill shared insights about how he and the team navigated the tricky longer waiting period ahead of their eventual IPO. These include including when to hire your advisors and specialists for maximum cost efficiency, how to run practice quarterly earnings calls, and ways to signal to the market you are serious about going public. 

Invest in G&A Rigor and Maturity

I have been at OneStream for five years, and when I started we were running $40 million in ARR on QuickBooks. One of my first key hires was our controller because we didn’t have the proper systems, processes, and tools for the team. We are now running on OneStream for planning, reporting, and consolidation as you would expect. 

In 2021, we started to bring people in to prepare for an IPO. We moved from a regional to national auditor, engaged a global accounting firm to advise on our S1, and hired an FP&A team. If we had gone public in the spring of 2022, that probably would not have been enough time to get our new team members up to speed. The delay in the IPO market kind of helped us. 

Choose Your Bankers Wisely 

At a previous company, I chose a whole syndicate. I would not do that again. This time, I chose two bank leads, J.P. Morgan and Morgan Stanley, and I made it clear it was not a competition between them. It was about collaboration and teamwork. 

We hired our investment bankers in 2021, and I would 100% hire only our lead bankers again because we had an efficient underwriting process without a lot of people giving their opinions. The approach worked well given that we waited three years before we went public. 

We didn’t choose the rest of our syndicate until the spring. Choosing a syndicate is the worst week of your professional life. It is a horrible process, but don’t outsource it to an Investor Relations consulting firm. You are the CFO, and you need to own it. No one will burn a bridge because you might become a CFO at another company at some point. 

‘Practice with Pads On’

We used the two years before we went public to do mock quarterly earnings calls where we had team members from Morgan Stanley and J.P. Morgan on our “calls”. The ‘practice with our pads on’ mentality helped us get ready for prime time. Our CEO Tom Shea and I got feedback from everyone and that helped us get better. Some of our board members attended them, and they gave us feedback, too. We used that time we waited to go public to put ourselves in as real a situation as we could. 

Consider the “Run Rate” Cost of a Delayed IPO 

I would budget $500,000 per month for costs associated with going public. That does not include the banker fees, which are basically taken out of the IPO proceeds. You have your lawyers, accounting firm, and HR advisors; my advice when you hire these people is to make sure your company is serious about going public. Otherwise, the longer you wait, the more these fees will add up. 

Your Investor Relations Hire is Not Just a Hire – It’s a Market Signal

I hired our Head of IR four weeks before we kicked off the road show. There were some good reasons for it. Back in 2021, there were IR leads hired to take companies public that never ended up going out, and most of them have either left that company or are still trying to help take those companies public years later. We initially outsourced our IR team and brought in Market Street Partners as an advisor. They helped me on the mock earnings calls. So I waited to hire our Head of IR because, when we did, I wanted to signal that we were actually going public. We hired the right person at the right time. 

There is Never a Perfect Time to Go Public

I don’t know if the window was open or closed when we went public, but we felt like we had talked to all the right people, priced our shares attractively, and would have a good investor response. If you do these things, I think you can go public any time. 

I did conferences in the spring and investors liked our dynamics: $500 million in revenue and cash flow positive in 2023. Investors want to see that you are profitable, or that you have a solid path to profitability. The feedback we got from them was that we should go public.

Pricing Considerations: Weigh Your Ideal Price Against Investor Support

Ultimately, we were 20 times oversubscribed, so we ended up pricing it at $20 per share. We probably could have priced it higher than that, but there were a couple of long-only investors that don’t often invest in IPOs who were willing to invest at $20, but had less conviction at $21. We wanted them in the deal because of their long-term view, so we ended up pricing at $20. 

After we decided on $20 per share, we walked out of the pricing room and the $20 per share price was reported by Reuters. That blew my mind. If I ever do this again, I am going to make everyone leave their phone at the door of the pricing room. 

An Important Aside about the “Long” Investors 

We ended up having one of the ‘long-onlys’ sell out of their position at $30. That was fast, but I don’t get fussed about it. It is the job of investors to make money on behalf of their investors. Our team is going to focus on running our company and being as good as we can be. 

Investors are Looking for “Durable Growth” in this Market 

I’m not sure that there are any public companies that are guiding over 30% growth in 2025. I literally think the number is zero. Investors would rather have growth than profitability. 

In so many of the conversations we had leading up to the IPO, investors didn’t really ask us about 2024 or 2025. It was about if we can grow 20% each year for the next five years. They want durable growth. 

Learnings From a First-Time Public Company CFO

This is my first time in a public company CFO role, and one thing that surprised me was how many decisions that I had to make in the IPO readiness process. You can’t raise everything up to the CEO. 

There were two other important resources I learned on to answer all of these questions. Our general counsel and I were locked at the hip, and we would talk multiple times every day. And I would also reach out to our lead investor, a public company that was well-versed in these matters, and ask them for their take on some of the key decisions we needed to make.

Life as a Public Company CFO: It’s Business, But It’s Also Personal

People say that they are not going to look at the stock price every day, but people look at the stock price every day. And you’ve got your commitment to your investors. You and the CEO make personal commitments to the strategy you share with investors and, when you are in the public eye, that becomes even higher stakes. I feel personally committed to delivering what we said we were going to deliver during the roadshow. 

The Takeaway: 

Over the past three years, the number of companies going public decreased. However, with sentiment around the IPO market warming up next year, companies are starting to more seriously consider their exit options. 

Bill’s learnings from OneStream’s IPO highlight how a company can successfully go public in an closed IPO window. Companies that apply Bill’s ideas can better navigate the challenging road to an exit and set their companies up for public market success. 

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