Tom McDonald is a Partner/Managing Director and Head of Business Development. He is responsible for marketing the firm’s capabilities to potential new clients as well as the institutional investment community.
Despite some signs of resistance, initial public offerings (IPOs) continue to move along at a robust pace. With fears that the window may close, some company boards and management teams find themselves scrambling to enter the mix before it is too late. Perhaps by reflex, the first thing they often do is pick up the phone to call an investment bank.
However, before you join their ranks and take your first banker pitch, there are some key – and sometimes overlooked – steps you can take now to ensure you hit the ground running.
You worked hard to prepare for your IPO and made it to the first day of trading. Celebrations are certainly in order, but there is plenty of work in the pipeline. In fact, operating as a newly public company presents a whole new set of challenges.
When it comes to investor relations, the focus of your first 100 days as a public company is to educate and communicate with investors and analysts — and to build on the momentum of the IPO to establish credibility, refine your messaging and vision, and provide the information that key stakeholders need. During this time period, your investor relations (IR) function should be in full swing with set procedures, policies, and designated spokespeople in place. In addition to delivering a well-crafted message, meeting with investors, and responding to analyst requests, we recommend that you create a strategic IR plan for the next 12 months and start preparing to report quarterly earnings for the first time.
Below, we share our view of some of the most important tasks during your first 100 days.
Public healthcare companies often question the best course of action during quiet periods — those stretches of time during which they should limit their interaction with Wall Street due to their knowledge of material and timely information that has not yet been disclosed. Specifically, management teams struggle to figure out what the quiet period means for their investor relations (IR). Should they bring to a halt all communications with the investment community or have limited interaction? Should they answer only fact-based (or historical) questions or avoid inquiries altogether?
While the formal quiet period regulated by the Securities and Exchange Commission (SEC) comes with clear guidelines and regulations, informal quiet periods are far less defined, and variation exists in how much (or little) a company communicates with investors and analysts.
One of the first places investors look to learn about and form an opinion of your company is your investor relations (IR) website. Often a microsite accessible from your corporate website, your IR site puts at investors’ fingertips the data and information they need to evaluate your company and make decisions about investing.
Yet IR websites do more than provide investors and sell-side analysts with numbers and percentages. Done well and meticulously maintained, they communicate who you are as a company and enable you to cultivate relationships and build trust, not just with the investment community but also with the media, your board, the corporate community, and the general public.
Management teams often hear this advice when communicating with Wall Street — under promise, over deliver. While under promising and over delivering is one of the most effective ways your company can build trust and credibility with the Street, it is much easier said than done.
Why are trust and credibility so important? In large part, the long-term value of your stock hinges on how Wall Street feels about your company and how much they can trust what your management team says. Yet building trust doesn’t come easily, and promising more than can be delivered happens to companies of all sizes and stature.
This time of year, Wall Street is abuzz with opportunities to meet, greet, and hear firsthand from you and your management team about what’s happening with your company. There are requests to “go on the road” with virtually every sell-side firm, whether an analyst from the firm covers your company or not. There are also countless investor conferences, bus trips, and industry events — all of which you will be asked to participate in.
The buy side values access to the C-suite probably more than anything else. In fact, many of the major investment firms base the commission they pay brokers on how many management teams they provide access to each quarter. A great deal of money is tied up in these events, so they are important.
It is fair for any executive to believe that his or her business’s strategy and ability to execute are what will ultimately dictate its fate with investors, not how those strategies and results are communicated. In principle, that may be true, and we can probably all pick out a few cases to prove that point. However, in practice, we believe it cannot be overstated how much a company or management’s credibility can be at stake based on the approach taken with investor relations and communications – especially the investor presentation.
Whether for a one-on-one at a conference or an IPO road show, your corporate presentation remains a critical piece of your investor relations strategy. A PowerPoint file may seem trivial compared to the entirety of your enterprise, but the investor presentation remains one of the most tangible and effective tools for building (and losing) investor trust and engagement.
With nearly 200 years of Wall Street experience combined, we have seen a wide variety of healthcare company presentations. While many successfully focus investors on key value drivers, just as many run into pitfalls that can betray the company’s intended message. Could your presentation be starting your investor interactions on the wrong foot?
2013 was an incredible year for the United States initial public offering (IPO) market — the best since 2000. Of the 222 companies that went public, a record 55 companies (or 24.7 percent) were from healthcare, which experienced more IPOs than any other sector. Will healthcare break the 55 IPOs record in 2014? Time will tell.
Investor meetings are essential for managing and expanding your shareholder base. They provide investors with clarity on a company’s story and can allow you to gauge potential investor concerns, but most importantly, they provide management the opportunity to control the story being told to investors.
The buy side often views a meeting with management as a critical component in their due diligence process. Even in the wake of increased scrutiny from SEC regulators regarding Reg FD, these meetings give the buy side more insight into a company story, recent developments, and potential headwinds.