On the Road to IPO? 5 Things to Consider
At the beginning of 2020, no one could have foreseen a global pandemic followed by a sudden recession, civil unrest, and (who can forget) the murder hornets. Yet, despite the many challenges our nation has faced this year, tech IPOs have been surging.
During the initial COVID-19 market volatility, it was hard to imagine that the 2020 tech IPO market would be anything but moribund – very much unlike last year’s hot environment, with successful tech IPOs including Crowdstrike and Zoom.
And that dire view seemed to be coming true earlier in 2020. However, recent months have seen a dramatic shift to a red-hot IPO market as stocks stabilized and rallied. According to PwC, “the window opened in June, when much-needed liquidity infused the markets and led to the strongest month for IPOs in 13 years.”
Recently, companies like Lemonade (NYSE: LMND) and Vroom (NASDAQ: VRM) have gone public – with shares soaring as high as 50% on listing day. Other tech companies, including Palantir, valued at nearly $20 billion, and Rackspace, are set to follow.
If an IPO is on your roadmap, here are five key moves to consider:
1.) Hire an Investor Relations (IR) firm. We often work with and recommend The Blueshirt Group, but there are several other great firms out there specializing in IR that can handle all things, from setting up your IR site to drafting announcements such as public S-1 filing, roadshow launch, pricing, deal close, and quarterly earnings announcements. This process can get complicated quickly, so best to enlist experts.
2.) Let senior management lead the charge with developing the registration statement (or S-1). Tempting as it may be to allow the underwriters or your general counsel to take the reins in drafting the highly complex and detailed S-1, senior management is closest to the business, so they should play an active role to ensure the right key messages are included.
3.) If filing confidentially, be prepared for a leak. In July 2017, the Securities Exchange Commission (SEC) changed its rule to allow every private company to file a confidential form S-1 permitting companies to keep detailed analysis of business operations from public view until the S-1 “flips” public. However, confidential filings can get leaked, so be prepared with a statement – even if it’s “no comment” – in case media come knocking on your door.
4.) Lean on your PR team to prepare for the big day. There’s no such thing as being overprepared, is there? Listing day is thrilling and things move quickly, but the real magic happens during the lead-up. Lean on your PR team to help you develop key messages, media Q&A, a company fact sheet, timeline, briefing background, and conduct media training for core spokespeople. We’ve also worked closely with firms like Solebury Trout that specialize in IPO communications and preparedness and bring relationships with financial broadcast and other media that complement the work your PR team and the exchange will do. There are a number of other things you can do to ensure media briefings on listing day go smoothly, such as testing technology ahead (Zoom, Skype, Teams, etc.) and making sure executives’ video backgrounds and audio are broadcast ready.
5.) Don’t forget to breathe…and schedule breaks on listing day. On listing day, adrenaline runs high, as this is often one of the most memorable days of one’s career. So enjoy the ride. It can be easy to get caught up in the excitement, but don’t forget to schedule in short breaks for spokespeople to hydrate and eat to ensure they remain sharp. And don’t forget to show gratitude to the media, employees, customers and partners who helped get you here or took time to speak with you on the big day. Just be yourself and have fun.
No matter where you are on your path to IPO, these considerations can help get you there successfully. Newly listed companies may be ringing the opening bell virtually these days, but a strong tech IPO market means more firms will be taking the big leap.