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The median deal size of an IPO in the United States last year was $108 million. There’s a lot riding on a company’s going public, and there’s only one chance to do it right. The transition a company makes from a privately held entity to a publicly traded one can feel like a shock to the system — and it is, as many aspects change at once. Issues regarding valuation, disclosure, investors, insider trading and company spokespeople are among the many challenges new public companies and their executives must learn to deal with effectively.
With more than 20 years of public relations and marketing experience, I have developed a keen understanding of the media landscape and effective communication strategies necessary to aid business to business (B2B) tech clients in reaching business objectives and establishing themselves as leaders within their industries. As a result, I have participated in 18 IPOs across eight international exchanges.
Well before and throughout the IPO process, the public relations team plays an integral role in building the market buzz that is essential to IPO success. With proper foresight and coordination between members of the IPO team, key parties and a public relations team, a company will find itself prepared for the rigors encountered when operating in a regulated environment.
The Pre-Quiet Period: Aggressively Raising Awareness
Prior to the start of the quiet period, well-planned coverage campaigns released over an extended period of time have the potential to positively impact market perceptions about the company. Pre-IPO preparation, done carefully and correctly, can help to ensure that good news resonates among the company’s key audiences, creating the right degree of market buzz.
During this time, the public relations team should be developing concise and consistent messaging that clearly communicates the company’s business and aggressively raising awareness.
PR And The Quiet Period
The timeframe between the S-1 filing date and the start of public trading is referred to as “in registration” or, more commonly, “the quiet period.” Following the initial date of trading, the quiet period extends for an additional 25 days.
During the quiet period, no information outside of a company’s S-1 document can be publicly disclosed by senior management, the underwriting or legal teams, or the communications specialists. Moreover, the issue of disclosure governs all public relations activity during the quiet period, including active promotion of the company to journalists, forward-looking statements made by senior management and related activities.
Successful public relations has an important role to play during the quiet period. By establishing a lengthy prior track record of regular news announcements, such as press releases, resulting media coverage and awareness of the company through industry trade shows and other public events, a company will be well-positioned.
During the quiet period, public relations specialists can maintain a similar level of activity to ensure the dissemination of information to all the company’s key audiences and that they understand the “correct” messaging. PR pros will also coordinate with the public exchange’s media specialists to implement the appropriate, SEC-approved public awareness of a stock’s first trading day.
Finally, the public relations team will also work to comprehensively disseminate positive messaging to ensure that the company exits the quiet period with forward momentum. After the 25-day post-IPO quiet period ends, new issues of disclosure emerge surrounding “material news” in external communications. Close coordination between senior management, the investor and public relations specialists will ensure that a company’s messages resonate among its key investment and non-investment audiences.
Communication Tools During The IPO Process
All along the IPO journey, three tools will help achieve communication goals: press releases, collateral, and analyst and press tours.
• Press Releases
A consistent flow — about every two weeks — of releases based on substantial news should be the goal throughout the IPO process. Significant announcements should be positioned to support press and analyst tours.
Law firms interpret SEC regulations differently. However, most allow releases during the quiet period that don’t hype the stock. Partnership, product and staffing announcements and, in some cases, customer wins are generally allowed during the quiet period.
Once the S-1 is filed, all press releases must be approved and signed off by the company’s attorneys before being submitted to the news wires.
Six months before the IPO, it is advisable to commission a high-level marketing white paper that defines market, products and position. This may be used throughout the pre-IPO process by analysts, investors and press. It is also useful to have several case studies available that describe customer wins.
PowerPoint presentations reflecting the white paper messaging should be created for both the press tour and in-depth analyst briefings. Technical presentations should be given four months prior to an IPO to highlight new customers and technology. A high-level presentation that describes market potential and strategy to garner market share should be given approximately two months prior to the IPO filing date.
• Analyst & Press Tours
Just before the quiet period begins, a press and analyst tour based on substantial news will generate press throughout the quiet period, and a majority of the coverage will appear in conjunction with the IPO.
Meetings with major analyst groups ensure that the company will be fresh in the minds of the analysts when investors call for background information. A press and analyst tour should also be planned shortly after the IPO to stimulate the momentum already gained.
Plan For Success
Communications during the IPO process has many moving parts and must strictly adhere to the disclosure guidelines of the SEC. Well-planned coordination between members of an IPO team, PR team, legal team and other vested parties is essential. It should begin a year prior and last well after the company’s stock begins trading publicly. This will ensure that strategic messaging resonates among the company’s key audiences, generating the right degree and quality of attention for IPO success.