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Getting Ready for the IPO: 10 Investor Relations “To Do” Items Before the Pricing

For months leading up to your S-1 filing, you probably have been singularly focused on creating that massive tome. You have spent significantly more time with your lawyers and auditors than with your own family -- and you cannot even begin to imagine a time when you won’t be spending every waking moment with your bankers. So now that you’ve left the long nights (and great food spreads) 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 10 “to do” items before then:

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,” management biographies and fact sheets. Your website is arguably the most important vehicle you will have to communicate with investors, so make sure it has everything that investors need and expect.

2) Create a disclosure policy that outlines the information that your company will communicate on an ongoing basis and that demonstrates your commitment to transparency. The SEC has recommended that companies have written disclosure policies. Do not make the policy too narrow. 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 dial in. A spokesperson should respond to all calls as soon as possible, but most definitely within 24 hours. In addition, with the emerging application of social media to investor relations, the disclosure policy should include a social media policy 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.

4) Implement a board-shareholder communications policy. Shareholders are increasingly bypassing management and communicating directly with company directors. Forward-thinking 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, such as day-to-day operational issues. See Sharon Merrill Associates President Maureen Wolff’s Podium post on board-shareholder communications.

5) Determine who is handling the investor relations function. Some companies use internal investor relations officers, some outsource the function to an investor relations agency, 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 corporate-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 small groups of employees to ensure that they understand basic responsibilities and the serious ramifications of insider trading.

7) Train your management team in disclosure rules and IR. Investors and analysts often reach out directly to C-level and mid-level management to gain information about your company – and an edge on their competition. These executives should be well-versed in SEC disclosure rules and trained to understand your company’s disclosure policies in order to avoid selective disclosure. If your senior executives have never worked for a publicly held company, they also should be trained in IR best practices relating to conference calls, IR presentations and other investor interactions so that they always put their best foot forward.

8) 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.

9) Build a targeted investor database. Your company’s shareholder base will constantly change and evolve depending upon its performance and that of the industry and overall market. In fact, many of the initial buyers of your stock will immediately begin to sell shortly after your IPO prices. To grow your shareholder base and build shareholder value, you need to target the right investors for your stock, and aggressively get back out on the road. Your IPO roadshow is not the end of your meetings with investors, it’s just the beginning.

10) Get some extra sleep! The IPO roadshow can be a grueling. By the end, you’ll be delivering the presentation in your sleep; that is if you can get any.

As with so many endeavors, preparation is critical to success in investor relations. So make sure that you have positioned your company to be successful in IR. An effective IR program will be critical to avoid stumbling out of the gate with investors, and will help you to build shareholder value for the long-term.

David Calusdian
Executive Vice President & Partner

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