Analysis

Spotlight On: cutting through the IPO noise

Charlie Barker

The drumbeat of IPOs in 2021 grows ever louder by the day. But how can companies looking to list right now stand out from the crowd when meeting potential investors for the first time?

More funds were raised through new listings in Q1 than any opening quarter since 2007 and momentum has continued, with over twenty companies worth a combined c.£14 billion completing their IPOs so far in Q2 and counting.

With 60 plus more companies reported to be looking to list over the coming months, getting communications right in early meetings with investors has never been more important. You only get once chance to make a first impression, so what should wannabe PLCs be focused on?

There are four key areas we’ve been working on with the corporates we’re currently advising in preparation for their first presentations to investors… aka the “Early Look” or “Pilot Fishing” roadshows.

1. Positioning and key messaging

There is no one size fits all solution for getting positioning right at IPO; but there are plenty of lessons learnt from past successes and failures to incorporate. It is necessarily different according to each company: where they are in their development, the sector they are in, their plans for growth, and so on.

But crafting an impactful and succinct investment case to make sure that positioning is well understood is central to sparking investor interest in a new company and getting their attention. A slide explaining the investment proposition early in the presentation should clearly explain the key strengths of the business, the opportunities ahead and how it can take advantage. That needs to be backed up by slides that deliver the right key messages, supported by data points and KPIs to create a compelling, distinctive equity story. Start by answering the “why invest” question to frame the presentation that follows, and finish with the same summary as the final thought for investors to takeaway.

And don’t discount the importance of ESG. It’s widely recognised that it is now a key consideration for investors. But rather than just having an additional slide explaining an ESG policy, think about incorporating ESG into the explanation of how the business is run and how it fits into the future strategy.

 

2. Preparing for scrutiny

For many management teams, an IPO roadshow is the first time they will face the scrutiny of fund managers – the seasoned investment professionals they must win over and whose backing they need to make the float a success. Practice might not always make perfect, but intensive rehearsal is by far the best preparation for first encounters.

It’s the job of the IPO advisers to probe hard on any potential deal-breakers, scan the horizon for upcoming industry and macroeconomic curveballs, and help shape answers to head off potential issues at the pass. Convincing answers require clarity and transparency, providing reassurance to focus minds back onto the core investment proposition. Having relevant stats to hand to back up answers is a key part of this.

In a world where still many, if not all, ‘meetings’ are virtual, there are also new dynamics to consider. Have the management team had specialist presentation training to make the most of the format? Have protocols been agreed between the presenters about in-meeting feedback? While body language is more difficult to read and attention spans are shorter, a virtual meeting offers new opportunities to provide live guidance in a way the traditional face-to-face meetings did not. Embrace the new technological age and have a live chat / email group running through meetings – any feedback will be less painful than a kick under the table at least!

 

3. Media engagement priorities

Quality media coverage can provide a valuable reference for investors researching the company ahead of the Pilot Fishing meetings. But may also be seen as an unwanted distraction of management time. In each situation, media strategy should be carefully considered ahead of the early look presentation roadshow to decide what the objective should be and how best to manage any changes to the initial plan. It is also prudent to plan for news of IPO plans finding its way to a journalist, as it so often does. So being prepared with a ‘leak strategy’ – statements and protocols to ensure the first, tone-setting, piece of media coverage tells the story you want – goes without saying. Having professional photography that brings the story to life ready should also be a priority in this preparation.

A proactive approach with media may also have its merits. Giving a trusted journalist a “scoop” on an IPO will help to shape the article when it’s written. Working with them, providing time to ask questions and even potentially giving access to an interview with management – who have been thoroughly prepared of course – helps to avoid misunderstandings and unhelpful copy. But be prepared; their first question will always be about valuation. So agreement on that front will need to be reached first with advisers.

If the IPO story has leaked, with that threat no longer hanging overhead there may be opportunities to continue to raise a company’s profile and seed key investment case messages through the media. Is there an entrepreneurial success story to tell? Is the business a post-COVID winner or central to the ‘building back better’ and/or greener agenda? Whether trade or national, there may be hooks for coverage to warm up investors doing their desktop research ahead of early look presentations. Laying the groundwork for when the media becomes re-engaged with the IPO story upon launch further down the line from the Early Look roadshow can also help to cultivate understanding and support.

 

4. Thinking ‘digital ready’

Building an investor relations website ahead of listing is an important workstream and one that shouldn’t be underestimated. Ahead of the Early Look, work can begin on a template structure to populate as the IPO materials become finalised further down the line. In the event of an IPO leak, a company’s website will be the first port of call for an interested investor, so ensuring any corporate website is updated with relevant information about the business can also ensure continuity of message from the outset.

But being truly digital ready means much more. Auditing a company’s social channels should be an early priority – do they portray the professional (or at least professionally managed) image investors will want to see? Is there any potentially problematic content that has been posted? Taking action to tackle any issues early will prevent them becoming a reputational sore later.

Planning, and potentially implementing, a social channel strategy should also start to make sure opportunities to tell the company story are not missed. LinkedIn has over 30,000 fund managers within its professional-focused network; putting some paid social spend behind a piece of content or supportive media coverage will help ensure it gets in front of this important community.

Cutting through

If you’d like to discuss further, please get in touch… our experience has shown that the earlier a specialist IPO communications adviser like MHP is brought in to assist with these areas, the more value we can add – giving us time to understand the business, its opportunities and potential challenges, as well as building constructive working relationships with the key people within a company and establishing a partnership so that we work as an extension of the internal team. We look forward to hearing from you.