In honor of Facebook's IPO, I have a simple question for those companies now in the IPO queue or anticipate that you will be in the next 12 to 24 months: are you sure you are ready for the public?
Ipos | Street Talk | Dix & Eaton
The good folks at Deloitte recently put out a wonderful whitepaper on "being public" - did you see it? While not directly addressing the communications aspects of the issue, there's a lot of great takeaways for IROs (or those that play them on TV). Among other gems, I really liked: "... proper planning prevents poor performance." Might have to get that as a tattoo.
It does seem odd to me that so more companies - and/or the law firms, iBankers, auditors that counsel them through this process - still leave IR preparation until the very end of the process (or to chance altogether). As we've discussed here before, IR programs/functions are not built in a day... there is a compliance mechanism to put into place... there is a marketing component that needs to be developed and aligned with the business strategy... there are policies to adopt and embed... there are people to train... there are protocols to put into place... there are tools to develop... believe me, it's much easier to do (and do well) when you've got the 12 to 24 month window that Deloitte references than the two weeks following the road show.
Thoughts as to why IR is left to the last minute?
To say there are a lot of deals stuck in the IPO queue might already qualify as one of the great understatements of 2012, right up there with "Republicans seem to disagree on who should be the GOP nominee" and "The European financial market seems a bit strained of late."
To say I have a recommendation for either the GOP or Europe might qualify as one of the great overstatements of all time, I do have a strong recommendation for those companies currently waiting to go public: use this time wisely!
Time after time I have seen management teams view "going public" as the completion of a process rather than the beginning of one (¿Cómo se dice "rude awakening"?). Believe me... companies that begin preparing for this new reality long before the S-1 is being drafted have a much easier time transitioning and performing after the deal has gone effective.
To that end, here are seven simple strategies for future public companies to consider in advance of the offering. For those of you who have already walked this (green) mile or are walking it right now, what would you add to the list?
According to Dan Primack, it's time to kill the IPO quiet period because, among other things, "It's time for the SEC to let companies communicate more freely with everyone..." While I am all in favor of making sure the governing rules and regulations align properly with the reality of the marketplace - and always think it's a good idea to see how we can get the government out of the marketplace - I think Mr. Primack has the gun pointed in the wrong direction on this one.
It's not time to kill the quiet period - it's time to (not literally) kill those who insist on putting together unreadable prospectuses filled with industry jargon, legalese, and fill-in-the-box boilerplate pap that make it nearly impossible for investors to get a true sense of the issuer's distinctive value proposition. It's time to treat the prospectus as a marketing tool, not merely a required compliance document. It's time to finally make "plain English" a reality rather than a theory. It's time to focus less on historical/unaudited/pro forma financial results and focus more on the core intangible assets (e.g., innovation/commercialization, management credibility/integrity, corporate reputation, market position, quality of strategy, customer loyalty, governance, CSR, etc.) that will drive results and create future growth opportunities. It's time for the prospectus to directly answer the primary question on every investors' mind - "Why is now the right time for me to take a position in this company?"
As Mr. Primack wisely points out, it's "... too loud a world to keep these [IPO] companies so quiet." But, from where I sit, killing the IPO quiet period will only increase the noise level in and around an initial public offering. I'd rather we focus on improving the quality of the discussion.
Position:Senior Managing Director
Rob oversees Dix & Eaton’s investor relations practice and is a member of the firm’s Leadership Committee. Over his nearly 20-year career, he has developed and executed investor relations programs for companies in a wide range of industries and market cap sizes.
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