Race to Go Public in Ride-Haling Is a First IPO for Both Uber and Lyft GCs

Kristin Sverchek, Lyft general counsel (Photo: Courtesy photo)

Uber Technologies Inc. and ridesharing rival Lyft Inc. are racing toward an initial public offering—and neither company's general counsel has gone public before.

Uber CLO Tony West joined the San Francisco-based company from PepsiCo, which was already public when West came on board. His Lyft counterpart, Kristin Sverchek, joined the company in 2012 with a background in M&A and no experience at a public company.

It's not unusual for a GC at an IPO-bound company to lack firsthand experience, said Shriram Bhashyam, the general counsel and co-founder of EquityZen, a startup that allows investors to buy stock in private companies.

"It is not uncommon for companies who are going public to have a general counsel who has not previously taken a company public," he said. "Often you'll see someone who has been at the company for a few years and they've built up trust with the founder and have alignment around vision and direction of the company."

Ari Pandes, an associate professor of finance at the University of Calgary, agreed that West and Sverchek are not anomalies. He said in-house legal experience with IPOs could smooth the process but is not a necessity. That's especially true if other executives—particularly the chief financial officer—have taken a company public before.

The CFO is typically "in the driver's seat" during an IPO, Bhashyam said. Uber hired Nelson Chai, who has served as an executive at a number of publicly traded companies, as its CFO in August. Chai is the company's first CFO since 2015. Uber CEO Dara Khosrowshahi said in a press release that Chai would be a great partner "as we move towards becoming a public company."

Lyft's CFO Brian Roberts joined the company in 2014, according to his LinkedIn page. He previously held leadership roles at publicly traded companies Walmart and Microsoft.

Even if the CFO takes the reigns, in-house legal leaders still play a key role. Bhashyam noted the importance of having an executive who understands the legal language around IPOs and can translate that to business leaders.

"The general counsel does have a strong input, and that will usually be around the disclosures," Bhashyam said. "They'll also work with counsel on the legal aspects of selecting an underwriter."

In-house leaders with all levels of IPO experience can also play a crucial role in selecting the right outside counsel and communicating the business' needs.

Pandes that GCs should work with outside counsel during an IPO launch to set up procedures for what comes next as a public company, preparing for filings and other new obligations.

"The in house legal team will be in a good position to learn and understand that process a little more and basically get the ducks in a row," he said. "So you come out of the gate really understanding how to be a public company and advise with the senior management team on some of those public market requirements."

He added GCs may also choose to build an internal team with securities experience to keep up public company responsibilities post-IPO. Uber hired Covington & Burling partner Keir Gumbs, a corporate transactions lawyer in August. West said Gumbs' hire would play a "critical role in making sure we have the right governance and compliance framework" as a company.

In a Nov. 2017 interview with Corporate Counsel, Sverchek hinted Lyft planned to hire more securities experts after its IPO. Sverchek, who has never worked at a public company, also noted that she'd be ready to take on her first IPO when the time came.

"We’ve been through a number of private rounds of financing since I joined the company, so all in all, I think we’re ready to flip the switch on that when and if we think it makes sense," she said. "We are very used to being diligence- and audit-ready at a moment’s notice."