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7 Investor Relations “Things to Do” Before Your IPO

If you’re the CFO of a pre-IPO company, the monthsSharon Merrill Associates Investor Relations leading up to
 your S-1 filing can be exhausting. You’ve read your registration statement so many times you have it memorized. And you cannot even begin to imagine a time when you won’t be spending every waking moment with your bankers.

But now that you’ve left the long nights at the financial printers behind, it’s time to focus on investor relations. You need to hit the ground running with IR as soon as your company prices its offering, so here are seven investor relations “to do” items before the big day: 

  1. Develop your IR website. The IR website must be ready to go live on the day of your IPO pricing.  It is most cost-effective to hire an IR website hosting provider, which will develop your site and aggregate content such as news releases, SEC filings and stock data.   You also need to prepare additional content for your site such as “Frequently Asked Questions” and board and management biographies. Your website is arguably the most important vehicle you will have to communicate with investors, so make sure it has everything they need and expect.
  2. Create a disclosure policy. It should outline the information your company will communicate on an ongoing basis and demonstrate your commitment to transparency. The SEC has recommended companies have written disclosure policies, so make sure this isn’t just a verbal understanding. Don’t make the policy too narrow, either. This could haunt you in potential litigation should you digress slightly from the policy. A key component of the disclosure policy should be the company’s corporate spokespeople. This should be a very small group of people to ensure message consistency. Decide in advance who will be taking calls from the various audiences and who will conduct triage on the calls when they come in. A spokesperson should respond to all calls as soon as possible, but most definitely within 24 hours. The disclosure policy should include a social media component, as well.
  3. Determine your guidance approach. There is no one-size-fits-all solution to guidance, so your policy deserves very careful forethought. While some only think of guidance as earnings and revenue projections, it is so much broader. Companies provide guidance on many different types of financial measures. Some do not issue specific numerical guidance, opting instead to offer more qualitative, directional information on a set number of financial metrics. The first step in making this decision is to determine how much visibility you have into your company’s financial results. If you are relying on murky forecasts, “less may be more” when issuing guidance. Peer best practices will provide you with a standard for comparison, but keep in mind that what is prevalent within a peer group isn’t necessarily “best.” Ultimately, your guidance approach needs to be something you have confidence in for your company.
  4. Implement a board-shareholder engagement policy. Shareholders are increasingly bypassing management and communicating directly with company directors. Proactive companies will have a policy in place that determines which investor inquiries should rise to the director level and what type of proactive dialogue the board should be having with its shareholders. Your directors should be well trained and understand the types of questions that are appropriate for them to answer, such as those related to corporate governance, and those that are more appropriate for management, including day-to-day operational issues. See Sharon Merrill Associates CEO Maureen Wolff’s Podium post on board-shareholder communications for good ideas on this increasingly important subject.
  5. Determine who is handling the investor relations function. Some companies use internal investor relations officers, some outsource the function to an investor relations consulting firm and some use a hybrid model. Talk to other companies of your size and determine the model that would be most effective for you.  
  6. Conduct “public company responsibility” training for your employees. For those employees who have never worked for a public company, life after the IPO can be a culture shock. They need to understand why the level of company-wide communication may change and why it is essential that they keep sensitive information under wraps. Have your corporate counsel, internal IRO or IR firm conduct sessions with employees to ensure they understand basic responsibilities and the serious ramifications of insider trading.
  7. Conduct executive presentation coaching. Even seasoned public speakers use coaches to hone their presentation skills. Prior to the IPO roadshow, make sure that your team receives presentation training so that they most effectively communicate the company’s story to the investors on the roadshow –  and to the thousands they will present to as their life on the public stage continues after the IPO.  The most important component of this training is preparation for questions from investors.  Develop a comprehensive Q&A document and make sure that every management team member is able to answer each question flawlessly. 

Your long-term investor relations plan must stay top of mind throughout the IPO process. Six months after you price, investors won’t be talking about the IPO; they’ll be grilling you on your prospects and holding you accountable for public statements about the business. Preparation will be critical. So make sure you have positioned your company to be successful in IR.  An effective IR program will be essential to avoid stumbling out of the gate with investors and will help you to build shareholder value over the long-term.

David Calusdian, president at Sharon Merrill Associatesoversees the implementation of investor relations programs, coaches senior executives in presentation skills and provides strategic counsel to clients on numerous communications issues, such as corporate disclosure, proxy proposals, shareholder activism and earnings guidance. 

S-1, Initial Public Offering, IPO, Investor Relations, S-11, Pre-IPO

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