Financially Responsible Marketing

How to Engage the Street: 5 Practical Tips

Posted by on Aug 5, 2015

engage the street

For the C-Suite, the IPO process can give rise to considerable frustration.

You find it difficult to catch the ear of investors, to engage the street. Yet you’ve got a real story to tell. To build your company to where you are today it’s taken hard work, smarts, time, luck, and good decisions. Why the deaf ears?

To engage the street, you may have to move your focus a bit away from operations and the exciting new trails you’re blazing. And a bit closer to reasons why they can believe in ongoing, assured revenue and growth. Can you paint a clear picture of exactly how your company makes money? Can you point to a healthy track record? Do you have a clear strategic vision and a detailed plan for the future? And what about your competitive positioning – can you show how your offering is different and needed?

 

Five tips to engage the street

1.  Research investment bankers ­– who will lead the deal?

  • Zone in on the space As you speak to investment bankers and analysts, try to fine-tune your understanding of the space they operate in – who focuses where. Your best fit will be with the banks/traders/analysts that operate in your space, know your industry well, and have a clear commitment to trading your stock. Take note of how well they trade in your area for a company of your size. Some have broader networks; some may have particular expertise in distributing stocks to institutions. Smaller contenders may be able to offer relationships with specific investors that suit you well.
  • Consider compatibility Next, think about the compatibility of their trading desk for the area in which your company will be categorized. No, it’s not a marriage – but you’ll be talking with them regularly in order to build a strong working relationship. Does the trader(s) get your firm and your vision?
  • Look for enthusiasm and commitment Developing the offering for your IPO involves a lot of heavy lifting upfront. Your banker will also be involved in the due diligence process to prepare for a TSX or TSXV listing. So keep in mind that you’re choosing a firm, not an individual. One person who believes in your story may not be enough to get the deal done. Ensure that your contact has the strength of their company behind them, including a trading commitment and a strong placing capability. If your ibanker doesn’t display enthusiasm in their selling efforts, you won’t be happy with the results.

 

2.  Start talking Now, start a dialogue with the investment bankers who know your industry. Watch their responses and listen carefully! Are they getting your story? Are they onboard with your vision? If the answer to either question is ‘no,’ take action with your pitch immediately. Note what they ask and make sure to incorporate answers to common questions. Make sure to highlight your management team – the investment community places considerable emphasis on their ability to deliver shareholder value. And if you aren’t succeeding at making your story and your people leap off the page with your internal resources, reach out for outside help to make it happen.

3.  Keep it going Take note of who comes forward and shows interest. Engage these people! Keep the dialogue going. Don’t expect instant results. Sometimes it takes a series of meetings and meeting expectations consistently.

4.  Establish a routine Before the actual IPO date, visits with your bankers and investors for pre-marketing are critical. You want to communicate your story and vision to your underwriters and potential investors. Clearly define your business and the opportunity! Potential investors favour a focused firm with a strong position over one that dabbles in many business areas.

5.  Making the meetings work  It sounds simple, but in the tumult and travel of a roadshow, setting up meetings can be considerably more complicated than usual. While the brokerage firm/s will coordinate, make sure they know exactly when you are coming and when you are available. Be geographically aware. Not all of your appointments will be in adjacent buildings. Take travel times into account. Be flexible! Some of those you are meeting with may only have 20-30 minutes available. Respect their time and tailor your presentation accordingly. You don’t want to miss a big opportunity because you couldn’t finish your presentation.

 

One last thing to consider – safeguard your street cred

If you hire assistance with investor relations, make sure the firm you choose is well respected. These people will become a part of your voice. They’ll have considerable influence in how you shape your story to captivate audiences and win over investors. So in addition to delivering clarity, conciseness and polish, it’s critical that your IR firm assists you in safeguarding your street cred by helping you present your story accurately.

Whatever else you do – keep your story consistent. Don’t exaggerate! Raising expectation levels will come back to haunt you. Develop a reputation for candour and consistency. Over time it’s money in the bank.