It’s Not Too Early – or Too Late – to Act Like a Public Company
March 24, 2010
Following the sudden halt of initial public offerings in 2009, indications are that IPOs are slowly but surely making a comeback as companies cautiously test the capital waters. According to Dealogic and The Wall Street Journal, the number of IPOs globally rose to 138 in the first two months of 2010, compared with a mere 31 for the same period last year.
While that’s a significant increase, continuing uncertainty in the markets is likely to hold the flow in the deal pipeline below traditional levels. Still, if an IPO or recapitalization strategy is part of your long-term business plan, making some preparations now will ensure that you and your organization will be ready to fulfill your responsibilities – and attract targeted investors – when the time is right for your company to go public.
Here are seven simple strategies for future public companies to consider and for existing public companies to revisit:
- Have a compelling message. Simplify your business strategies and future growth prospects into a concise list of distinctive investment highlights that answer the question, “Why would an investor want to invest in this company now?”
- Know your peer group and competition. Analyze the individual investment highlights of your peer group. Understand their IR activities and strategies and how they impact shareholder mix, valuation, analyst coverage, capital structure, trading volume and other metrics.
- Have a Web strategy, not just a Web site. Since investors rely heavily upon the Web for both conducting due diligence on investment ideas and maintaining visibility on their portfolio companies, make sure you are providing online information that investors need in the format they want. Think of your Web site as a 24-hour investor call center, not a repository for old news releases.
- Know your audience. Maintain an updated list of key investors and targeted potential investors. Make sure your investment bankers help you capture contact information during deal and non-deal road shows.
- Hire an investor relations officer. Having a dedicated internal resource will help you to achieve a full and fair market valuation for your equity, as well as influence your shareholder mix.
- Learn the rules. Make sure the members of your management team understand and have been trained on how to fulfill their fiduciary and public disclosure duties as part of a public company – particularly as it relates to your disclosure policy and practice.
- Don’t forget the media. The media remain a powerful source of investment ideas for buy- and sell-side analysts. For companies considering an IPO, media outreach efforts need to be in place long before an S-1 is drafted so that these efforts can qualify as part of the “normal course of business” as defined within a “quiet period.” It is important to remember that properly merchandising your media coverage with investors is as important as generating it.
Being publicly owned carries the same responsibilities for all companies. It’s never too early – or too late – to initiate best practices in investor communications.
For more on the latest developments in IR issues, see Rob's blog or follow him on Twitter @robberick.