After two HOT years for Initial Public Offerings (IPOs), the IPO market was due for a cooling period – and cool it has. “There’s an inverse correlation between market volatility and IPO activity,” said John Tuttle, vice chairman of Intercontinental Exchange’s ICE NYSE Group. The combination of rising interest rates, geopolitics, and shifting investor expectations have had a chilling effect on new listings. 

And while the IPO market is quiet – for now – it’s unlikely to remain that way for too long. In fact, many companies are taking this time to assess their readiness to enter the public markets. A great move, if you ask us. The Initial Public Offering (IPO) process is one of the most complicated and demanding events a growing company can go through. You need an IPO roadmap to be ready to deal with investors, auditors, lawyers, investment bankers, and accountants, among others. And then there’s the paperwork…

If you’ve never taken a company public before, you’re probably wondering what lies ahead of you. Never fear, with our IPO Roadmap you’ll be thinking three steps ahead. 

Audacia Strategies’ IPO Roadmap

We’ve talked about this before:  in a 3-part series, I broke down the process into three parts: developing your IPO story, building an IR team, and living with your IPO. Taken together, these three stages make up Audacia Strategies’ IPO Roadmap. Here are the highlights from each part.

1. Developing your IPO story.

Your IPO will include multiple filings that describe your business, your risks, and your opportunities. While you’ll speak with several different financial audiences (e.g., institutional investors, credit rating agencies, sell-side analysts, etc.), it’s important to develop a coherent story. We call this your investment thesis. Learn it, live it, love it. It is the core of your discussions with financial stakeholders and especially investors. Consistency is key.

After you have agreed on the  investment thesis for your business, it’s time to develop a narrative arc that answers the question: “Why buy this stock?” Make sure that you tell your story – not your competitor’s story – and that it goes beyond the numbers. Remember, investors are human. They respond to a real story like anyone else.

If you’re going public, that means you’ve spent some time honing your value proposition. Now is the time to expand upon and refine this message. Explain what makes your company unique? What’s your “why?” Think about where you can connect with investors in an authentic way and lean into that story.

Ideally, your story establishes your credibility and proof points and sets reasonable expectations. Keep the following in mind: your first few earnings announcements following the IPO will be closely watched to see how the company’s performance matches expectations set during the pre-IPO roadshow and how the management team characterized the firm’s performance in its S-1 (i.e., your initial registration statement with the SEC).

2. Building an IR team.

Once you have your investment thesis and narrative, it’s time to get operational. Put together your dream IPO team and make sure your team includes people with investor relations (IR) experience. 

Having a solid investor relations plan will guide your IPO discussions and ease your transition to life as a public company. The most important job? Establishing and building corporate credibility with your stakeholders through transparent and consistent communication.

And yes, there are some tools of the trade you’ll need to run an effective IR program:

• An IR website: A place for investors, analysts, and the public to see your investment story. This should be easily accessible from your company’s primary website. 
• An IR platform: A tool to track consensus estimates, trading patterns, analyze your shareholder base, research and target new investors, review ownership trends, etc.
• Stock surveillance (optional): While not a requirement – it can be pricey – this type of information can be incredibly helpful to understand the ebbs and flows within your shareholder base. It can also be a lifesaver when your CEO sticks their head in your office and says, “what the heck is going on with our stock today?!”

Your IR team will ensure that you don’t stumble out of the blocks and set you on the road to building long-term trust with shareholders.

3. Living with your IPO.

Yes, Virginia, there is life after an IPO. I know it may not seem like it now because you’re so focused on preparing for the IPO that it’s hard to think past next week. But trust me, your future self will be glad you thought about this third and final stage ahead of time.

Don’t get me wrong, going public is an achievement in itself. By all means, take your victory lap. But also realize that having an IPO opens you up to a whole new level of public scrutiny. This is good news, but it means you need to follow through on your public commitments, keep telling your story (even after a 15-hour day of investor discussions), and continue to educate and build your shareholder base.

The key to a successful life after the IPO can be broken down into four simple steps:

1. Set reasonable expectations.
2. Tell stakeholders about them.
3. Execute on those expectations.
4. Tell stakeholders about that.

When your company goes public, you step into the spotlight. Yes, the stakes are higher during life after the IPO. But it’s nothing you can’t handle. You’ve got this!

Nervous about prepping for your IPO? Audacia Strategies has your back! Contact us to schedule your consultation.

Photo credit: Close Up Of Multi-ethnic Group Working Together Around A Laptop by Flamingo Images from NounProject.com