Tweet

IPOs…Getting There Isn’t Half the Fun

Written by: Andy Marken

Article Overview: The process, the procedure for doing an IPO is grueling...there are no easy steps. We've tried!

IPOs…Getting There Isn’t Half the Fun

It’s Thursday afternoon so this must be Dallas.

Just four more cities, six more presentations and the pre-IPO road show will be behind the management team. The months of planning, preparation, coaching and grilling will be a distant memory as the company moves into the public arena.

Everyone, including the investment bankers, is optimistic that the grueling schedule will pay off.

As for us, it’s our fourth IPO marathon in six years. They don’t get easier. They don’t get more fun.

It’s times like this that we tend to agree with the president of a company we worked for a number of years. He had weighed all of his options and had decided that the best course of action was to merge his firm with an already public company.

He was probably right. It was certainly less expensive. It was less strenuous on the management team. It was less distracting for the entire organization. The results were probably the same…everyone had equity which could be traded, bought and sold.

But the IPO is the more normal avenue for the company to generate value for investors as well as capital for growth and expansion. To pave the way for the IPO, management hits the road to generate excitement, to create demand for shares which will hopefully outstrip the supply, thus driving up the price for the shares when they are made available.

For the IPO to be successful though public relations professionals have to be involved months in advance. Usually, the longer the lead time, the easier the process and the better the results.

With any start-up an IPO is always an option and increasingly it is one of the company’s key strategies and milestones. In the rapidly growing dot.com arena we often wonder if the IPO is the only reason people form new companies because there never seems to be a model for making a profit.

Despite periodic market dips and valleys, venture capital firms continue to invest record amounts of capital with the idea of getting massive returns. Last year nearly $36 billion was invested in more than 4,000 new companies. This year the dollar value of investment funds and the number of new start-ups will increase yet again.

Underwriters are understandably concerned that pre-IPO companies are properly prepared and that they hit the road at the right time, with the right messages. The ritualistic road show is a whirlwind, grueling effort no matter how well PR has paved the way and assisted the management team. The days are long, the presentations are repetitive and it’s the underwriters and PR counsel’s responsibility to pave the way and make certain everything goes smoothly…and profitably.

Fortunately, most venture capital firms now insist that part of the early stages funding will be used to immediately begin grooming the firm’s reputation well in advance of the IPO. Most seasoned PR people also urge clients to follow a simple rule…act like a public company even if you are not.

If the CEO chooses the merger route as with the company we cited earlier it can be very beneficial because of the enhanced image and value. If the company chooses the IPO route and PR has been aggressive for months or years, the regulators will permit the company to continue its PR activities during the mandated quiet period.

The communications strategy usually involves aggressive product, technology and senior management publicity activity; extensive media and financial relations; focused activities with industry and financial analysts; publishing an annual report and taking advantage of outside media training specialists.

In today’s IPO environment perception may not be everything but it does go a long way in helping the company and its products in achieving their fullest potential. PR people who have been through the drill will quickly tell you that honing the company’s identity and message targets is not as easy as the company managers would like to believe. The identity, messages and impressions among the divergent audiences have to come together smoothly if the IPO is to be successful.

At the same time, few fledgling management teams understand that they need extensive media and analyst presentation training. The ability to speak and the ability to be properly understood are miles apart. Having gone through the training twice ourselves it doesn’t take much to humble even the best orator but its vital if the right image and the right message is to be presented.

It’s hard for Stanford MBAs who have just formed the next Amazon.com or Webvan.com to understand that for all of their education they still have a lot to learn. It is even tougher for engineers who have received millions in VC money for their network technology firm that the world will not beat down their doors to purchase their leading edge solution or invest their own or institutions money in the company just because of their “insanely great products.”

Good media and analyst presentation training will bring the management team back to earth and prepare them for the cruel pre-IPO world.

While every senior manager will at one time or another represent the company, it is usually the CEO who will take the lead in promoting the company and its image. Promoting the company president through media relations and public speaking engagements isn’t carried out to stroke his or her ego. Instead, this senior executive is usually the one who can best articulate every aspect of the company, its market direction, its objectives and its long-term image.

While few CEOs or management teams enjoy committing all of the time required to prepare for the pre-IPO road show, they have to understand that they can’t be too prepared. Analysts will grill the CEO on every little item and take notes on the answers. Each time the team meets with them they ask the same questions and the answers can’t deviate. They will constantly ask about pricing, competitors, business models and customers. Management has to convince them that the company and the team is real and has a sound formula for delivering value to investors.

While key people are on the road show circuit, the CEO needs to ensure that he or she has a strong management team taking care of the company’s day-to-day activities. While the IPO process is on everyone’s mind the firm can’t lose sight of the fact that at the end of the day the company has to be profitable or the IPO will never be successful.

Whether the company is planning an IPO or wants to take the merger and acquisition route a multifaceted communications program will be a vital part of the overall activity. It’s a long, hard process that takes months and years to develop.

Just when the goal is in sight…it’s time to catch another plane and make another presentation in another city and another boardroom. Keep in mind you have to make your company and management look better, stronger and more capable of succeeding than the 500 – 2,000 plus IPO hungry organizations.

Then, when it’s all completed you can look forward to having more fun with quarterly analyst conference calls, stockholder bulletin boards and annual meetings.

##########

Related Articles
  Communication Skills - What we need to be Aware of.
  Find out how to Communicate Effectivly
  Spam: You probably hate it but can you define it?
  What are the 3 biggest challenges faced by supply chain/purchasing professionals today? (Survey Result 15)
  Did you meet your sales goals through June?

Article Tags:



Related Forum Posts
Re: Business hype - The Irish bar has a nice World Cup promotional campaign on to draw people in to view the games live... Each game has a special drink discount IF something happens during the game, and whenever possible the drinking theme is related to the game. EG: Half price drinks if Japan scores (as the bar is in Japan)... Half price tequila shots if Mexico scores first...
Half of 2011 is gone - Half of 2011 is gone. Did you achieve your goals? If not you can look at your mistakes in the past six months and concentrate on what to do in the next six months. Before we know it, we will be greeting each other Merry Xmas and everything still remain the same.
Re: Half of 2011 is gone - [quote="ideasuniversity":3ru9gf0f]Half of 2011 is gone. Did you achieve your goals? If not you can look at your mistakes in the past six months and concentrate on what to do in the next six months. Before we know it, we will be greeting each other Merry Xmas and everything still remain the same.[/quote:3ru9gf0f] Yes, let the 1st half of this year be a lesson to help us succeed in the 2nd half of the year!
Re: Prospects in animation business in coming years. - Yes the Animation Industry is growing and it needs cost effectiveness, more employees producing quality work. Whether you make a 2d or a 3d animation it requires lots of money, concentration, patience and it sometimes become painful too. Half of the job is done once you have developed the storyboarding. As video advertising is growing, it would adversely affect the television advertising. Recent trends have shown that advertising budgets for online advertising is rapidly growing against television advertising all over across the world. Gaming industry is on its peak these days and animation is in huge demand.
HABIT:... The Helper of Entrepreneur - I was thinking about a friend of mine who lost his business due to untame habit. Like I used to tell him that habit forms your habitant. The secret to your future lies in your daily habits so ask yourself right now, "Are my habits today going to help me achieve my goals in life?" This is a life-empowering question so be honest with yourself in determining your answer. I got this qoute online when I was researching more on habit the author is not known. I am your constant companion. I am your greatest helper or your heaviest burden. I will push you onward or drag you down to failure. I am completely at your command. Half the things you do, you might just as well turn over to me, and I will be able to do them quickly and correctly. I am easily managed; you must merely be firm with me. Show me exactly how you want something done, and after a few lessons I will do it automatically. I am the servant of all great men. And, alas, of all failures as well. Those who are great, I have made great. Those who are failures, I have made failures. I am not a machine, though I work with all the precision of a machine. Plus, the intelligence of a man. You may run me for profit, or run me for ruin; it makes no difference to me. Take me, train me, be firm with me and I will put the world at your feet. Be easy with me, and I will destroy you. Who am I? I am a HABIT! - Author Unknown My question is what do you think you need to change in your habit as an entrepreneur?


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Executives and Elevators Perfecting That Pitch

An Intelligent Contact Sheet

Common Sense Stress Management

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.