Contemplating an IPO in the Next 12-15 Months? An Important Wall Street Conference Season is Here
How to get the most from your meetings with public investors, bankers, and research analysts
As Q4 earnings season ends, public market investors are starting to extend their investment horizons, slowly broadening risk tolerance, and adding new positions to their portfolios beyond the largest cap stocks. In 2023, large-cap companies cut costs more quickly and effectively than smaller companies, resulting in greater profitability and thus strong relative stock performance. Many strategists are forecasting outperformance by small and mid-cap growth stocks versus large-cap growth stocks in 2024 as the combination of peak interest rates, the potential for increased budgets for technology spend after 18 months of austerity, and the rightsizing of operations from small and mid-cap companies, should result in greater relative top line growth and operating leverage.
CEOs and CFOs eyeing an IPO over the next 12-15 months MUST start (or re-start) engaging with public investors and key market influencers soon and begin a program over the next several quarters to attend a range of conferences.
Public institutional investors, bitten by the valuations of 2021 IPOs, and aware that they did not have enough time to effectively diligence every IPO that they participated in that year, are understandably cautious as they contemplate new issues. Therefore, they will be more selective and insist on meeting a private Company multiple times before buying stock on their IPO during 2024 and 2025. For this reason, CEOs and CFOs eyeing an IPO over the next 12-15 months MUST start (or re-start) engaging with public investors and key market influencers soon and begin a program over the next several quarters to attend a range of conferences. We would recommend attending both large conferences that attract the biggest funds but also limit your relative visibility, and smaller more bespoke conferences that may just be for your sector but attract analysts and portfolio managers that have deeper specific interest and domain expertise. Importantly, at all these events, CEOs and CFOs must start communicating like a public company with consistent messaging, KPIs that resonate, the right mix of humility and thought leadership, and always erring on the side of conservativism, as the numbers you will ultimately show Wall Street analysts should reflect the appropriate caution of a volatile future.
Every March brings a triumvirate of highly anticipated and attended technology conferences in San Francisco, all taking place the week of March 4th. Hosted by Morgan Stanley, KeyBanc, and JMP Securities, these conferences bring many hundreds of institutional investors together for meetings with several hundred public and private companies, setting the tone for messaging to Wall Street in 2024 and beyond. In addition, high profile tech, consumer, industrial and auto, financial services, media and entertainment, energy and business services conferences take place, hosted by the likes of JP Morgan, Citi, Evercore, Jefferies, Bank of America, Piper Sandler, UBS, Wolfe and others, all in March.
While private companies are eager to meet with investors and tell their story, it is often overlooked that this is a great time to ‘test-the-waters’ by seeking feedback from those meetings. While it is important to educate institutional investors, bankers, and analysts with a public ready narrative, it is equally important to use these interactions to gauge investor sentiment, gather feedback, and evaluate potential partners on your IPO journey.
Management should consider doing two things in every meeting. First, have someone in the meeting taking notes placing special attention on the following: Who from that fund is in the room? Are they an analyst or portfolio manager? What questions are being asked, and what questions are coming up repeatedly? Does the investor seem engaged? Did they prepare for the meeting? Secondly, allow time at the end of your meeting to ask them questions – What would you like to learn more about the next time we meet? What are some of your concerns about investing in our space or specific to our Company? Who do you see as our public peers? How do our KPIs compare to some of them? How big is a core position in your fund?
The important thing is to take notes and take “note”. Memorializing these conversations, and seeing what questions or comments continuously arise can be exceptionally instructive for a variety of reasons including refining your narrative, defining your peer set, and having early impressions of which funds may or may not become great shareholders.
At each of these conferences a considerable amount of time is also spent with bankers and Wall Street equity research analysts. Some of them will undoubtedly be part of, or even lead, your underwriting syndicate. This is again a great time to measure true engagement from the banks. Each of the large banks have excellent people, many of whom have decades of experience leading IPO processes or publishing value-added research on companies. At the boutique banks, while they may not be the ones drafting your S-1 and marketing the IPO, seasoned bankers will often have differentiated views on the markets or your peer set, and their research analysts are often the more valuable sources of information and opinion for institutional investors. Some things to consider include: how thoughtful were the banks in setting you up with the right meetings at the conference? How much senior attention did you get from the senior bankers or analysts? Did they make relevant introductions to other parts of the bank or potential partners and investors? Were they spending more time selling you on their capabilities or more time learning about your specific goals and timeline? Who is going to be the day-to-day banker and capital markets person if you move forward? Was the conference well run and were you able to take away important insights?
CEOs and CFOs eyeing an IPO in the coming months must prioritize engagement with public investors and market influencers, utilizing conferences as key opportunities to refine their narrative and gauge investor sentiment. The upcoming conferences in March offer a pivotal platform for companies to showcase their potential and establish meaningful connections with stakeholders. Effective engagement with bankers and analysts during these events is crucial, as they play a vital role in shaping the IPO process and providing valuable insights. By actively seeking feedback, refining strategies, and building relationships, companies can enhance their IPO readiness and pave the way for successful market entry.