A Guide to IPO Communications StrategyJanuary 6, 2022 11:04 am
An initial public offering (IPO) might seem like a big celebration—the culmination of years of hard work all leading to the day when a private company finally goes public. While this grand vision can become a reality, it’s important to understand the steps and strategies that ensure a smooth transition for a company and its founders, management, employees, investors, and shareholders.
An IPO listing day is more accurately the beginning of a brand new corporate journey: one step in a process that reaches deep into the past and hopefully extends into a brighter, more profitable future to come. The success of an IPO depends in no small part on a well-designed, and consistent communications plan to keep stakeholders and potential investors apprised of this journey.
In this guide, we’ll detail best practices for pre-IPO communications and suggest strategies to keep your company on track for its IPO listing day and all that comes after.
What is IPO Communication?
Communications teams are meant to function as the mouthpiece for a company’s internal and external audiences. IPO communication works in much the same way, but must be designed to facilitate the long-awaited day a company’s stock finally goes public.
No matter the industry, corporate communications teams are charged with developing a consistent narrative across a number of platforms that tells the story of a soon-to-be public company to clients, vendors, investors, and the general public. When it comes to IPO communications, this means catering your messaging to attract prospective investors.
- Why should they put their trust in your business model?
- How will your listed company use its IPO as a springboard for future success?
- Where will your listed company be in five years’ time?
To answer these questions and more, you will need to enlist the entire array of your corporate communications arsenal. Be sure to take all of the following steps:
- Announce milestones using press releases, newsletters, and media interviews.
- Provide your designated spokespersons with consistent messaging and readymade materials to ensure your company stays on the right side of SEC regulations.
- Prepare an IPO roadshow presentation to allow potential investors to meet with company executives.
By designing a strategy that meets your corporate needs, you can make the most of the pre-IPO process while preparing for a publicly-traded future.
Communications in The Pre-IPO Process
However you communicate on the road to IPO, you must do so both confidently and cautiously. With so many rules and regulations at play, and with so much at stake, it’s important to know some key details about the pre-IPO process and the role that communications play at each stage.
Before a company can offer its shares to the public, it follows a detailed process to ensure compliance with SEC regulations and optimize the profitability of its IPO listing.
While there is certainly no one-size-fits-all solution to IPO readiness , the following steps are commonly taken in the transition from private to public:
- Secure an underwriter & assemble your team – When a company goes public, it almost always does so with the guidance of a dedicated underwriter. This authority, typically an investment bank with a team of IPO experts, will provide a detailed proposal before signing an underwriting agreement. Of course, your underwriter won’t be working alone. You will also need to enlist the services of attorneys, CPAs, and experts on SEC regulations who will work in tandem with your underwriter to help you and your management team smoothly transition from private to public.
Having these dedicated professionals at your disposal will help your communications team plan a strategy that is equal parts effective and compliant as you enter the SEC-regulated “quiet period” (which we’ll discuss in more detail later).
- Revise and finalize the prospectus – The SEC Form S-1 is required for any company looking to sell shares of securities such as stocks or bonds on a public exchange like the NYSE or Nasdaq. Begun toward the start of the IPO process, the prospectus portion of the Form S-1 will include corporate plans for capital proceeds generated by IPO, details about the business model, a price per share, and information about company management and the underwriter.
While largely procedural, the completion of the Form S-1 will allow your company to consolidate its messaging and present the best version of itself to regulators and prospective shareholders alike.
- Issue shares – This is what it’s all about. When the listing day finally arrives, it marks an exciting milestone in the history of a successful company.
As shares are issued to the public for the first time, your communications team has an opportunity to capitalize on the spectacle of celebration and hope for the future. By planning speeches, organizing interviews, and strategizing for social media, you will ensure that the momentum of your listing day is harnessed to the fullest possible extent.
Although far from exhaustive, these are some of the most important steps a company will take on the road to IPO. By understanding them and seeing where corporate communication fits in the grand scheme of things, you stand to develop the strategy best-suited for your firm’s particular needs.
Putting the Public in Public Relations
IPO communication requires a crystal-clear message and consistent strategy. You’ll need a team of PR professionals who know what it means to strategize and implement the narrative that will attract new investors while staying true to your branding and history.
The following best practices for IPO communications strategy are designed to help you play to your strengths without running afoul of the SEC.
Learn the Rules
While the SEC has many rules for the IPO process, its “quiet period” requirement is aimed at communications in particular. In general, this rule takes effect once a company has begun the process of filing for an IPO, typically defined as when it enlists the help of an underwriter.
The quiet period is designed to make sure that potential investors can only obtain relevant information about a company preparing for an IPO through the prospectus it has provided to regulators. If the SEC determines that your company has violated the quiet period by communicating information not included in the prospectus to the public, it can implement a “cooling off period” and push back the IPO listing by several months, spooking would-be investors in the process.
As daunting as it sounds, the quiet period doesn’t mean you need to implement total communications silence. Technically, the SEC allows companies to continue their “normal course of business” communication throughout the IPO process. If your team already sends out regular press releases, conducts media interviews, and releases relevant data reports to the public, then you should continue to do so during the quiet period.
What this means, of course, is preparing your strategy before the decision to go public has been made.
Develop Versatile Messaging
Once you determine what can and cannot be said during the quiet period, you can get down to honing your messaging for internal and external consumption.
While regulations might seem restrictive, they can actually help you narrow your communication to its most essential elements, giving you a clear and consistent message that can withstand any revisions necessary to present it to different stakeholders.
By nailing down your messaging, you will be able to present your spokespersons with materials they can use for interviews, internal communications, and the all-important investor roadshow.
Corporate communication is nothing without the creative use of cutting-edge multimedia.
Enhance your message with images, fresh logo designs, exciting graphics, and video. However you choose to get creative, it’s never been more important to do so. Social media, smartphones, and an increasingly online world have established limitless possibilities for communications experts to engage with new technology. Not only will creativity help your message stay fresh, it will also show prospective shareholders that your company is oriented toward the future.
While an IPO is traditionally seen as an opportunity for founders and early investors to capitalize on their vision and efforts, the process marks an important milestone for employees as well.
As you develop a communications strategy for the IPO process, your team should find ways to involve employees wherever possible. This could include a question and answer session to provide details on what the workplace will look like after listing day, or even a company-wide celebration to show employees that their efforts have been recognized.
Issuer Direct: Your IPO Specialists
With so many opportunities to spread the word about your business, it can be easy to forget that an IPO is a step toward an exciting and profitable future. As you shape your strategy with regulations in mind, be sure to remind yourself of the many PR opportunities to come.
At Issuer Direct, we know the importance of corporate communications. An achievement such as an IPO is something to cherish with those who took the long journey to listing day together. It’s also something to share with as wide an audience as possible. Our investor relations and compliance resources will equip you to get your IPO messaging in front of the right people. Get in touch to learn more about our services for companies approaching IPO.
Corporate Finance Institute. IPO Process.
ICR Strategic Communications & Advisory. Making Noise in the Quiet Period.
Stock Analysis. IPO Statistics.