In this episode of Controllers Classified, Erik Zhou sits down with Karen Wu, the Chief Accounting Officer at Clari, to discuss the role of accounting in a company’s exit strategy. The conversation starts with an overview of Karen’s time in Transaction Services at PWC, where she helped a myriad of companies prepare for IPO - including Alibaba, the largest IPO in US history. Drawing on those experiences, Karen covers the reasons why a company may look for an exit, the types of exit strategies, and the role of the accounting team in those strategies.

Specifically, Karen speaks to some ‘musts’ that accounting teams have to get right no matter the exit strategy - things like closing the books on time, ensuring precision and reliability in financial statements, and being able to comply with public company requirements. She speaks to the IPO readiness timeline, and how companies should approach it not just through the lens of accounting and finance, but across all functions.

The conversation then pivots to Karen’s time at Clari. She shares her priorities as well as her POV on global accounting processes given the company’s international operations. Her number one piece of advice? Don’t be hesitant to outsource pieces of work to consultants who may have a better handle on local tax policies.

The episode closes with a funny story from Karen’s PWC days involving an inventory count of Hairy Crabs. Have you ever wondered how baby crabs should be classified on a balance sheet? Then you must tune in!

Key Quotes

“When you think about an exit, from an accounting team perspective, you got to have precision in your financial statements. You have to be able to close your books in a timely manner. You have to have established company policies - and the ability to follow those policies consistently.”
“If you can do 1-2 years of IPO readiness, that’s the best. You can of course do it in four months but companies who shortcut often struggle once public.”
“You should always do a close process review. You need a process that is repeatable and scalable and can become a muscle memory for the team to perform every single month.”
“Diligence requests during an acquisition are consistent with that of an IPO. You should still expect to have to show your top 20 customers with contracts; your top 20 vendors and purchase commitments; org charts; accounting policies; etc.
“Partner with your people team and law firms to understand the local employment regulations when operating globally, because those things are highly difficult to change once you put a process in place, and once you’ve exposed your current practice to employees”

Time Stamps

(00:33) Karen’s professional journey
(01:35) Understanding transaction services
(11:46) IPO readiness
(23:41) Acquisition readiness
(28:00) Accounting considerations for international operations
(39:00) Controllers are fun too: the accounting classifications of hairy crabs

Links