Going Public? Here are Seven Questions You Should be Asking

October 1, 2019

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Making the transition from private to public company is an incredibly exciting moment for everyone from top management to front line employees. But, it also brings with it significant change that can be jarring for any organization. As communicators, we’re often relied on to not only create the right messages and engagement strategies, but also to smooth out the process externally and internally. CEOs look to their communications team to answer questions such as “Do employees understand our strategy?,” “Why aren’t they more engaged?,” “Why don’t investors get it?” or “Why are the media focused on X?” By asking yourself these seven questions before the IPO process begins, you can be better prepared to communicate throughout the process and beyond.

1. Do we have a value story? What is it? Your value story is critical. Your management team will tell it to everyone from bankers to potential investors, and your company will be judged on it not only throughout the IPO process, but also quarter after quarter following. Even after listing day, your story and strategy will be front and center in your quarterly earnings reports. To ensure those outside the company understand your strategy, make sure your value story is strong, straightforward and transparent.

2. How well does my management team tell the story? Are they credible? Credibility is king on Wall Street. If investors have confidence in the management team and company strategy, then you’ll get more space to grow without investors breathing down your neck for results. From very early in the IPO process, carefully evaluate your management team’s presentation style and ability to deliver your value story. Refining their delivery through practice and coaching will secure that all-important strong first impression with Wall Street.

3. How prepared are we to meet the financial goals and strategy executives have outlined? As a communicator for a public company, understanding the company’s financial performance will allow you to shape the company’s narrative and make quarterly earnings reports more than just a read-out of results. To engage investors, earnings reports should include progress on strategy, what drove (or didn’t drive) growth in the quarter, previews of the rest of the year and how your company is meeting its commitments.

4. Do we know the rules and regulations around communicating as a public company? Once a stock ticker is attached to your company, there’s a shift in communications that occurs. From quiet period requirements to what information you can share with employees, communications are subject to specific regulations early in the IPO process and the consequences for breaking those rules can be significant. For example, once you start down the IPO road, you must take care to not “condition the market” with press releases, statements or media interviews designed to sway the investment community about your company. The same rule holds true for employees. If you have a large enough employee base, things you tell them aren’t necessarily just considered internal communications – it’s communicating to a large population that could impact your future stock price. To communicate successfully, stay tightly connected with your legal team and make a concerted effort to understand the rules of the road early in the process to avoid any missteps.

5. What are the hidden issues? Looking around corners is one of the hardest things to do, but in an IPO, it will save you pain and anguish later. Working closely with your management team, functional heads and others, seek to develop a deeper understanding of what challenges the company faces today and is expected to face post-IPO. Like in crisis communications, be ready with a plan for addressing those scenarios.

6. What is our governance structure? Are we ready to communicate about it? Communicating governance can be difficult. To communicate the “why” behind your governance structure, you need to develop a strong understanding of the principles that management and the board have put in place (especially if there are some less-than-shareholder-friendly stances in there). You’ll also need to be ready to help the media and employees understand your structure, as well as any changes to your structure.

7. Are our CSR efforts where they need to be? What about diversity and inclusion? In today’s world, investors are drawing tighter connections between values, business practices through programs like CSR and D&I and corporate performance. Being ready to communicate your efforts in these areas will demonstrate transparency and dedication to socially responsible initiatives, all of which are important to investors in the IPO process and beyond. But, to the earlier point regarding credibility and trust, be mindful that these actions need to be authentic and baked into your business – not just surface-level programs designed to check a box for investors.

IPOs can seem like a daunting process, but if you take the time to prepare early on, you can successfully help your company navigate the journey to Wall Street.