Groupon’s $700 million initial public offering marked the largest IPO for a U.S. Internet company since Google went public in 2004. Boards like Groupon’s that are transitioning from private to public ownership can expect both strategic and personnel changes as the focus shifts from strategic oversight to enhancing shareholder value.
Groupon founder and CEO Andrew Mason (left), at his company’s IPO at Nasdaq on Nov. 4.
“The mix of directors should change as the company is going public, in most situations,” observes Bob Damon, president, North America, at Korn/Ferry International. “When companies are private-equity-backed, those firms have seats on the board. Then, when going public, the board shifts focus on the skill set directors can bring to get the board more in line with the threeto five-year strategy of the company.”
Directors must bear in mind that their time commitment will increase following an IPO because of the governance and reporting requirements of a public company, and as they become accustomed to working in the new environment. “Like any sports team, you have to get your rhythm right, which may come later as the years go on,” says Damon.
In the year leading up to its IPO, Groupon elected Starbucks CEO and Chairman Howard Schultz to its board, led by executive chairman and company co-founder Eric Lefkofsky. Five members are independent. Ted Leonsis, vice chairman emeritus of AOL, leads the audit committee; New Enterprise Associates Managing General Partner Peter Barris chairs the compensation committee; and Groupon co-founder Brad Keywell chairs the nominating and governance committee.