This post was written by SmartBrief’s Tom Anderson.
Deepak Ahuja, CFO of Tesla Motors, helped the electric-car company raise $226.1 million with a June IPO. He recently was interviewed by SmartBrief for CFOs editor Tom Anderson about the things he learned this year and his outlook for 2011.
As CFO, what was the most challenging part of the IPO process?
Like any company that goes through the SEC approval process for an IPO in a compressed time frame, Tesla had to dedicate large blocks of time and resources to ensure that major regulatory issues could be resolved in a timely manner. As CFO, I had to oversee that the ball did not get dropped on any item — as no issue was minor in nature. The challenge for any CFO during this phase is how to maintain focus on the business, which is ultimately the most important value-creating activity, while being consumed by the intense demands of the IPO.
For Tesla, in the midst of the IPO process, we also entered into negotiations with Toyota for their direct investment of $50 million and with NUMMI for the purchase of the manufacturing facility in Fremont, Calif. These activities were equally critical for the business, before we embarked on the road show for the IPO, which also required focused attention from the Tesla team. Overall, it was a big juggling act.
What was the most important thing you learned as a CFO this year?
The transition from a private to a public company is a maturing process for an organization. A private company, however well managed, doesn’t have to deal with the intense regulatory environment that demands a more transparent organization. Tesla went through that maturing process as a company and this process will potentially continue for some more time.
Finally, the success of an IPO is ultimately dependent on how effectively the company management can communicate the story to each investor on the road show when sitting across the table. This interaction with investors and developing an understanding of their perspective was a great learning experience for me as a CFO. The IPO preparation process, which I went through for the first time, while very intense and time-consuming, did teach me the value of the controls built in by the public markets for the protection of the shareholders.
What is your top priority for next year?
The major priority for me is the same as for Tesla. The focus is on the execution of our plans to deliver the Model S in 2012.
What are your expectations for the economy in 2011?
Recent trends suggest signs of a slow recovery in the U.S. economy. The depth of the challenges facing this recovery are still massive. Shock from many factors individually or in combination can easily tip the recovery to turn sideways — whether it is Europe or internal factors such as the after-effects of cleanup in commercial real estate or the continued deleveraging by the American consumer. The next few years would probably require companies to be cautious about their expansion plans and keep an eye on their cost structure, unless they are focused on products that can capture share with game-changing attributes.