You are about to embark on a two-week IPO roadshow comprising 80 group and one-on-one meetings. What is your first priority – review your written materials to deliberate over the use of commas and whether your financial results are “strong” or “solid,” or practice presenting your story for clarity and consistency?
Surprisingly, some roadshow teams choose the former.
The IPO process can be a long and arduous process and the first steps involve creating the documentation that will inform potential investors and satisfy the requirements of securities regulators. The key document, of course, is the preliminary prospectus, which serves as the repository of all the information an investor needs to know about the company going public. This is crafted over several long days/weeks with every fact, data point, word and phrase carefully considered. It reflects the input of company management, investment bankers, lawyers and auditors. Once the prospectus is complete however it is important that the roadshow team transition out of intense edit mode.
The roadshow presentation that comes out of the prospectus needs to be direct and compelling. It has to clearly state the investible idea behind the offering and it has to convey a message that will continue to define the company once it completes the offering and achieves its listing. It is crucial to the success of the roadshow, but only if it is presented well. That’s why we advocate a hard “stop” be put on the roadshow deck, with all edits completed at least three or four days before the first meeting – usually the syndicate dry run. Then, management needs to rehearse the presentation intensely.
For prospective investors, management is the company and their decision to invest is strongly influenced by how well they connect with and trust them. To get there, the roadshow team must present their story clearly and succinctly and answer questions effectively.
In our rehearsal sessions we focus on three key areas: making sure the words in the deck fit the presenter, preparing for the different types of meetings faced on a roadshow and answering questions well. As the roadshow deck has the input of the investment banking team as well as company management, we take time with management to ensure they are comfortable with the flow, key phrases and marketing concepts embedded in the deck. Management has to “own” the deck as it’s difficult to win over potential investors if the delivery is stilted and unnatural.
We also advocate rehearsing extensively. Similar to practicing a golf swing or taking shots on net, if you practice it enough, the script becomes “muscle memory” and you are able to present as well at the first breakfast meeting as you will at the last dinner meeting at the end of the day. Knowing the story very well also allows you to be versatile to face the different types of meetings you’ll encounter. Roadshows consist of both group and one-on-one meetings, but mainly one-on-ones. In these meetings, management will present from a printout of the slide deck and sometimes they will be able to present each slide from start to finish and then take questions. More often, however, they will be peppered with questions throughout their presentation that sometimes can take the meeting off topic. In these cases, a well-rehearsed team can deftly move the audience back to their story and effectively convey the investible idea. In rehearsal sessions, we use role playing to help management face different meeting situations.
We consider answering questions well as one of the most important skills a management team can take on the road. The potential investors that we meet on roadshows see very many presentations. They know the roadshow deck has been crafted with the help of investment bankers and other experts. By answering questions clearly and succinctly, management can prove to them the depth of their knowledge and skill. In conjunction with management and their underwriters we build a list of questions that covers the typical and the difficult questions they may face. These are rehearsed along with the presentation to ensure clarity and consistency in the answers.