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.
Whether your company is on the road to an initial public offering (IPO) or currently operating as a publicly traded company, cultivating and then maintaining a strong relationship with Wall Street requires strategic planning and thoughtful execution. Interacting with the buy-side and sell-side is not a simple process, and we often observe companies making mistakes in their investor relations (IR) programs that can damage management’s credibility with the Street.
What are some common IR mistakes healthcare companies make, and how can you avoid them? To answer, I turned recently to the Westwicke team — and its more than 200 years of combined Wall Street experience. Here’s what they told me.
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.
For public healthcare companies and those on the road to an initial public offering (IPO), crafting an effective investor relations (IR) program is essential, and can significantly enhance the investment appeal of your company. Whether your company’s investor relations efforts are new – say, the result of going public – or just in need of a fresh perspective (let’s call it a “reset”), it’s important to keep in mind a few core elements as you plan.
Investor conferences offer an effective platform — and a variety of opportunities — for you to tell your story to investors. During the course of the day you may connect with at least a dozen investors and possibly as many as several hundred. What could be better than that?
Whether you are meeting one-on-one or with small groups, presenting a 20-minute overview to a large room full of investors, or delivering your pitch during a chance encounter in the elevator, it’s important to tailor your presentation to the audience at hand and the amount of time you have. Some helpful tips to raise your impact and exposure:
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.
You spend considerable time creating a professional investor presentation that tells a comprehensive story of your company. Yet aside from the analyst/investor due diligence meeting, few opportunities exist for you to deliver the entire presentation from start-to-finish. How, then, can you tailor your presentation to the time and opportunities at hand?
Let me give you a brief overview of the most common investor encounters, the opportunities and challenges they bring, and what you can do to prepare. I’ll also share some strategies to help you leverage your investor presentation to articulate a compelling story in time-sensitive situations — one-on-one and small group meetings at investor conferences, the investor conference presentation, and even the quick chance encounter that can happen anywhere.
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.
Private companies often tell us about the considerable time and effort they spend meeting with investment bankers and sharing insights on their business, out of hope that these bankers will take an interest in underwriting their IPO. Yet when we ask which sell-side research analysts they’ve met, we are typically met with a blank stare.
Many executives don’t understand the importance and value of meeting with sell-side analysts while still a private company. In fact, most management teams don’t realize that research analysts actually want to meet management teams of private companies. For sell-side analysts, meeting with private companies enables them to build an early relationship with promising companies and gain valuable insights on the industry and products.