Rob Swystun, Pristine Advisers
Recently, Sharon Merrill President and Partner Maureen Wolff released a couple of videos chock full of advice for companies who are ready to file their S-1 and make their Initial Public Offering.
I’ve gone ahead and watched the videos — totaling just under eight minutes — for you, extracted the advice and put it in this helpful and barely readable blog entry.
Before filing your S-1
Play dress up
Don’t get too excited. She’s talking about your company.
Companies that are getting ready to offer their initial IPO should start behaving like a public company well ahead of the IPO date.
That means establishing a pipeline for sending out news releases and getting those out there so your company already has some visibility. Those news releases should contain information that you would normally think about issuing to investors. That way you already have your news release pipeline in place and are used to sending out that type of information. You can send out news on things like:
- winning contracts,
- winning awards,
- management changes, and
- additions to the board.
Setting these precedents about what type of information you want to share and how you go about sharing it will ensure that these systems are in place for your S-1 filing.
Get coached up
Wolff also suggests coaching your management team to get more visibility by having them do some presentations at places like trade shows and attending private investor conferences. This will give them experience with presenting, and will also let them get a feel for the kinds of things investors want to know.
Other ways to give them some increased visibility are to get your management team to write some bylined articles or do some media interviews. The important thing here is to get them used to talking in front of people and having them hear what investors want to know.
Who are you?
Although this is good advice for privately-owned companies, too, Wolff says a company that is ready to go public really has to be able to define its mission, values and culture and how much of that they want to communicate to people.
Many companies, she says, don’t think about that type of thing until they’re ready to start working on the prospectus document. It’s good to have a handle on where you want to be and to have a vision of where the company is going and to have all your employees embrace that vision.
What are your measurements?
You will also want to think about what metrics you are going to use to define your company and how it will be evaluated. You can look at your peer companies to see what metrics they’re reporting on. This doesn’t necessarily mean that you have to follow suit and report on those same metrics. But if you choose to report on different metrics, you will have to explain to the investment community why you think they’re not the right metrics to measure your company by.
By thinking about metrics well ahead of time, you’ll be better prepared for when analysts start asking about specific metrics and you’ll be more well-prepared to justify your choice of metrics for measuring your company.
Upgrade your online presence
This one has to do with how you believe your company should be positioned. Once you start writing your S-1, you’ll need to think about that sort of thing. Updating your website so it is more like a public company’s website will give you good practice for writing your S-1. Make sure you have your mission statement and values on there and bios for the management team and your news releases. This way, Wolff says, people will know who your company is before you go public.
After filing your S-1
Give investors a place to visit
The first thing Wolff suggests doing after you’ve gone public is to get an IR website up and running or, at least, have a portion of your website dedicated specifically to IR. Get some help if you need to. There are a lot of firms out there that can help you with that sort of thing.
Your IR website will need to have things that investors look for, like SEC filings and news releases. The beauty of having an outside service provider manage your IR website for you is that this is their sole function so they, ostensibly, will be able to make sure it’s always kept up to date with information that is reflected in your S-1 document.
What are you willing to share?
Have a disclosure policy in place that outlines what information you are going to be sharing on a regular basis and what metrics you are going to be using to evaluate your performance.
Again, Wolff suggests looking at other companies in your sphere to see what they are doing so you have an idea of the kinds of information investors in your particular industry are used to getting.
Also, get used to the idea that you will have to communicate what the metrics are saying even during the bad times when you don’t like what they’re saying. You need to make your communications consistent, rain or shine.
You’ll need to make sure that all your employees understand what it’s like to work at a public company. Sometimes it comes as a bit of a shock to employees who find themselves working at a public company that was private just a week ago. The culture changes.
As an example, Wolff says that while a private company might have a big thermometer graphic on the wall to let everyone know how they are doing with sales, at a public company, they couldn’t have such a thing on the wall lest someone comes in and sees and and it gives them a leg up on other investors.
Everyone needs to be trained on what they can and can’t say about the company now and what information has to stay confidential.
Wolff suggests having your general counsel or your IR officer train employees in small groups with role playing to show them what types of questions they might get about the company and what they should say in response to these questions.
In addition to employees, training for the executive management team is a good idea, too. Investors might just go straight to them or mid-level managers in the company fishing for nuggets of information.
They’ll need to know who they should refer any inquirers to, whether it be an IR officer within the company or an IR agency that you’ve subcontracted the service to, so they are not inadvertently providing information that they shouldn’t be providing.
And, lastly, it’s time for executive training so that you can communicate your messages in the most effective possible way. Get all your executives trained on the art of giving effective presentations because they are going to be giving, as Wolff says, hundreds of presentations when you go public.
If you practice all these steps before and after you file your S-1 and before you price, you’ll be off to a fantastic start.