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Eight Investor Relations “To Do” Items Before the Pricing

For months leading up to your S-1 filing, you have been singularly focused on creating that massive tome. You’ve likely spent more time Zoom-ing with your lawyers, auditors and bankers than on anything else. But now that you’ve assembled all your metrics and risk factors, you need to get your IR house in order.

Here are eight “to do” items for ensuring you can hit the ground running once your company prices its offering.

1. Train your management team in disclosure rules and IR.

Investors and analysts often reach out directly to C-level executives to gain insights about your company—and an edge on their competition. These executives should be well-versed in the SEC’s Reg FD rules and your company’s disclosure policies in order to avoid selective disclosure, that is, the disclosure of material information to a single person or a limited group of people. If your senior executives have never worked for a public company, they also should be trained in IR best practices relating to earnings calls, one-on-one investor meetings, and conference presentations.

2. Conduct executive presentation coaching.

Even the most seasoned public speakers can benefit from coaching to hone their presentation skills. Prior to the IPO roadshow, make sure that your team receives presentation training so that they can communicate the company’s story effectively in any setting. The most important part of such training is preparing for questions from investors and analysts. Develop a comprehensive document of Q&A talking points to keep the leadership team’s responses on point and consistent.

3. Determine how you are handling the IR function.

Some companies have in-house investor relations officers (IRO), others outsource to an IR firm, and some use a hybrid model. Talk to other companies of your size to determine what might be best for you. At a minimum, you want to be sure that you take as much of the IR “busy work” off the plates of the CEO and CFO as possible. The IR role requires a particular skill set and might not be an easy hire, but retaining an IR firm can help bring the right internal candidate, perhaps a member of your FP&A team, up to speed. Additionally, an IR firm will be able to advise you regarding best practices for everything from messaging development and presentation technique to investor targeting and outreach, which will be invaluable in your first year as a public company.

4. Conduct “public company responsibility” training for your employees.

For employees who have never worked for a public company, life after the IPO can be a culture shock. Every member of your team needs to understand what changes are in store, why the level of corporate-wide communication may change, and—most importantly—why it is essential to maintain the confidentiality of all material nonpublic information. Have your general counsel, IRO or IR firm conduct sessions with employees to ensure they understand their basic responsibilities and the serious risks in play—from insider trading violations to shareholder lawsuits.

5. Develop your IR website.

Your IR website must be ready to launch on the day of your IPO pricing. It is most cost-effective to use an experienced IR website design and hosting provider that can develop your site based on design cues from your corporate website while aggregating content in a way that is both user-friendly and Reg FD compliant. Your website is arguably the most important touchpoint for communicating with stakeholders, so make sure you are telling your story in the most engaging way possible. Consider using video to make your company’s story come alive with virtual product demos, plant tours, and management interviews.

6. Determine your guidance approach.

There is no one-size-fits-all approach to guidance, so your policy deserves careful forethought. While you might think of guidance as just earnings and revenue projections, it can be much broader, encompassing multiple financial and non-financial metrics. Some companies provide qualitative, directional information on a set of financial metrics rather than specific numerical guidance. Take a look at what your peers disclose in order to gauge the guidance expectations of your analysts and investors. Your next step will be to determine how much visibility you have regarding your quarterly and full-year performance. If your visibility is limited, then caution is certainly warranted. Above all, remember that it is always better to under-promise and over-deliver.

7. Target the shareholder base you want.

In sports, they say that the best players are able to anticipate where the ball will be, versus simply going to where it is now. The same applies to developing your long-term shareholder base. Since many of the IPO buyers of your stock will start selling immediately after the pricing, you have an opportunity to begin to shape your shareholder base of the future. Develop the base you want by targeting a range of investors whose buy criteria match your company’s current investment characteristics or, just as importantly, the profile you expect it to have in the next three to five years.  Then, aggressively hit the road after the IPO to meet with these targeted investors.

8. Execute on a plan!

As with so many endeavors, preparation is critical to success in investor relations. Develop and follow through with an investor engagement strategy to ensure that you are carving out sufficient time for new targets and not neglecting current investors. In addition to non-deal roadshows and investor conferences, plan to host an investor day by the end of your first year as a public company. These events are a great way to raise your IR profile, demonstrate how you have implemented your enterprise strategy, and to show off the depth of your leadership team.

Contact us to discuss how Sharon Merrill can help you build an effective investor relations foundation for success during your IPO and long after your pricing.

David Calusdian

David is an accomplished communicator with more than 30 years of experience in advising and coaching CEOs, CFOs, IROs, and boards of directors through a range of critical communications events, including IPOs, quarterly earnings results, executive transitions, and M&A. David is an acknowledged authority on executive presentation coaching, investor relations strategy, investor day execution, and strategic messaging.