The financial roadshow can be defined as the high point of financial communication. Whether it's a commercial tour ahead of an IPO or a non-commercial one to support the appeal of a listed company's stock, communication sits at the center of the process during these periods. New technologies can improve the marketing and communication process and turn a roadshow into the lever event of a company's long-term strategy.
Roadshow preparation: start the conversation
From the moment an IPO is officially announced, things start buzzing. On the communication side, alongside offline materials, companies often build dedicated websites with statistics and promotional videos as part of a branding effort, as Even Spiegel, CEO of Snapchat, did in this video. Using this kind of tool is necessary but not sufficient. You still need to make full use of the power that digitalizing part of the roadshow's communication offers.
In fact, many companies only use their dedicated website as a showcase, when they could already be using it to encourage potential investors to interact with the team. Digital marketing isn't just a way to communicate information to future stakeholders, it's a way to find out who they are. This can prove decisive, particularly when preparing a question-and-answer (Q&A) session. The whole process your teams engage in is a conversation.
To court financial institutions, the pre-IPO roadshow most often starts with private meetings, held at the financial institutions' own offices.
Intensive communication phase
One-to-one meetings: a training ground
This phase is a decisive moment for companies preparing to go public. While banking and legal partners are on high alert, communication, investor relations, and marketing teams work hard to attract funds, private investors, and asset managers in general.
From this stage onward, more than logistics and scheduling, you'll need specific tools to plan your event and centralize all the features related to managing meetings and networking. On one hand because the packed schedule demands flawless organization, and on the other to optimize the return on this type of communication effort. The team is preparing the IPO itself, but must also keep in mind that it's preparing the marketing and communication of the stock after the listing.
Aaron Skonnard, CEO of Pluralsight (listed on NASDAQ on May 18, 2018), explains in detail how he used the one-to-one meeting phase to refine his message for investors. He's also a big fan of new technologies for recording the feedback from the investors he met.
The one-on-one meeting phase is complex: it often involves seasoned investors representing institutions that can support the listing and send the market a positive signal about the stock. These meetings are an end in themselves. However, this phase should also serve as training for the roadshow's high point: the group meetings.
Investors can give valuable feedback during this phase. It's a crucial help in fine-tuning your message before the first listing. One of the challenges is successfully adapting your message, as well as the practical elements of the company's financial communication, to the new realities that emerge from this feedback. The approach is therefore truly iterative and requires constantly updating the messaging and communication materials.
The mistake would be not sharing this feedback with all the teams involved in the roadshow. On this point, standard online collaborative project management tools will let you share feedback live and will be very useful.
Holding one-on-one meetings has the advantage of giving executives time to build momentum. It's therefore advisable to hold small-group meetings of 10 people or more, depending on the fundraising targets. This saves time and, above all, makes the way you present and explain the company more impactful.
However, depending on the number of investors to meet, these meetings can be exhausting.
After this "test the water" phase, in which the dedicated project team meets investors one-on-one, it's now customary to hold larger-scale meetings.
Tailor-made meetings
This is the path followed by many tech companies since the early 2000s. It's the path Alibaba took in 2014, launching a series of public roadshows across the United States, starting with a lunch at the Waldorf Astoria.
Of course, investor interest in this case was heightened by questions about the group's governance. This contentious element, combined with curiosity and promises of above-market returns, put Alibaba in the spotlight. A few years earlier, in 2012, Facebook had chosen the Sheraton for a highly publicized pre-IPO kick-off. More than 400 investors gathered in the hotel's ballroom.
This type of event draws even more attention when it's organized by a growing company with strong media coverage. However, these events aren't reserved for giants.
But above all, this type of meeting can have drawbacks that call for the use of technology suited to managing large-scale events.
Here are a few problems Alibaba and Facebook ran into during their roadshows.
To investors' great disappointment, Mark Zuckerberg only delivered an average performance, visibly bored during the question-and-answer session.
Some investors also complained about "the long wait before entering the ballroom" or said they "felt like they were being treated like cattle" source.
At Alibaba, 500 investors were expected for the first stage of the roadshow, but 800 showed up.
For smaller roadshows, on the other hand, an empty room can put off more than one already-skeptical investor.
Here's a summary of the pitfalls to absolutely avoid:
- The empty room
- The overcrowded room
- Low engagement
- A poorly prepared pitch
- A disappointing Q&A session
Solutions exist to handle this type of event. With digital tools, it's easier for the roadshow team to anticipate attendance numbers, and it's also simpler to manage entries and exits even when flows are heavy. With tools like digitevent, it's also possible to maximize guest participation in an event.
Get the most out of your Q&A.
Why not plan your Q&A using an electronic list that lets your guests send in questions for speakers to answer? If you decide to answer questions live during the session, a tool like sli.do or wisembly will be a valuable ally.
This type of solution lets you optimize and streamline question-and-answer sessions. Optimization comes from grouping similar questions that participants can send via their phone or via equipment lent out by the event organizer. Streamlining comes mainly from anticipating speaker turns and reducing the lag between questions.
Going further, participants can already jot down their questions on the fly, while the leadership team is presenting.
This way, you'll ensure that investors' questions and stated concerns are fully taken into account.
The data collected, in compliance with the GDPR, will be crucial in shaping your post-IPO financial communication, and will also be useful to all your teams once the company has actually gone public.
After the IPO: keep the conversation going
Whether it involves one-on-one meetings or larger gatherings, the roadshow is a touchpoint that later lets you send one or two follow-up emails to gather even more feedback and secure participants' support during the stock's launch. Rather than pushing these potential investors to buy the stock directly, it's better to keep them on a list you can use to share relevant information about your company.
Many groups now hold regular roadshows that are an integral part of the company's financial life, as you can see here.
Thanks to all the questions you've received, you'll be able to address investors' concerns after the IPO with a personalized marketing campaign.
Useful links:
https://www.reuters.com/article/us-alibaba-ipo-roadshow-idUSKBN0H31I520140908
https://money.cnn.com/2012/05/07/markets/facebook-ipo-roadshow/index.htm
https://hbr.org/2012/08/the-right-way-to-run-an-ipo-ro
