Strategic Communications Post-IPO Part 2: Maintaining Alignment

In our prior piece, Strategic Communications Post-IPO Part 1: The Road to Credibility, we discussed the first steps IR teams should take to garner credibility and build trust with the Street after launching an IPO. However, once a program has “achieved liftoff”, IR professionals should shift their focus toward keeping shareholders aligned with the narrative – while also courting new investors along the way.

Shareholder alignment is an ongoing effort

Once a company’s goals and strategies are clearly defined, successful public companies prioritize their efforts on building a shareholder base that aligns with those goals. Maintaining this alignment takes ongoing effort and transparency from both management and the IR team.

Companies that are successful in aligning expectations of investors and management make a commitment to do the following things on a regular basis:

Analyze the shareholder base

• Take inventory of the current investors. What is the style makeup? Is it mostly passive institutions, growth or value investors, or short-term money? Is there a clear trend of buying or selling amongst any investors?
• A thorough shareholder base analysis can provide a better understanding of the type of investors that are in the stock and the movement, while also serving as the foundation for other potential action items, such as developing a targeting strategy or determining how well the narrative resonates with different styles of investors.

Speak with shareholders often

• The Street’s investment thesis may shift after the IPO. Comparing investors’ current views against their thoughts at the IPO will help identify how the messaging has changed from the perspective of the Street. Periodically conducting perception studies, either formal or informal, is a great way to find the gaps between the initial story and where the company stands today and to ensure that management and the investor relations team fully understand what investors are taking away from messaging and conversations.

Keep an eye on the sell side

• Sell side research and estimates can have meaningful influence on the perception of your company – an analyst upgrade / downgrade, or a beat / miss versus consensus estimates might swiftly impact share price.
• Spend time with your covering sell side analysts, particularly in the wake of earnings and other material events, to ensure they are well-informed and are publishing accurate research. While you won’t be able to dictate each analyst’s estimates, answering their questions and keeping an open dialogue can help manage their expectations to keep them on the right track.
• Additionally, leverage earnings calls to provide qualitative or directional guidance to ensure the sell side’s estimates are in-line with company expectations.

Be ready for turnover

• Most companies experience considerable turnover in their shareholder base during the first two years after going public as initial investors take profits. The key is to anticipate this turnover and have an active and strategic buy-side targeting plan to counteract the effects by continuously targeting and converting supportive investors into new shareholders. Use insights from the shareholder base analysis to identify target investors to replace core shareholders that have exited. Develop a list of aspirational investors and ideal long-term holders and proactively cultivate these relationships.

Keep the IR website up to date

• The IR website should be a one-stop-shop for investors looking to access company information and get up-to-speed quickly on the narrative. Leverage the learnings from shareholder base analyses, perception studies, or a say-do analysis to update the IR website with materials that investors are asking for and that highlight where the company stands today. Make the site work for your company by providing resources that help investors understand the basics of the company and investment thesis. If investors can easily have their introductory questions answered via the IR site, you can expect to hold more productive and in-depth discussions in follow-up meetings.
• The two-year mark post-IPO is typically a good time to think about refreshing the website to better align with the current story and shareholder base. It is likely that messaging has changed, and investors will want to understand the company’s evolution since the IPO as well as the company’s track record.

Need help thinking through your investor relations program post IPO?

Reach out to the strategic communications experts at Riveron for comprehensive advice and hands-on assistance. We can help you take a proactive approach to surfacing and effectively messaging the goals, strategy, and demand drivers that are so critical for investors to understand in your initial years as a public company.

Looking for more insight on how to prepare for an IPO?

View a replay of our webinar, IPO Readiness Before the Capital Markets Open: Customizing Your Investment Narrative.

In this session, our expert panelists take a deeper dive into creating the most effective investment narrative for the three critical support groups that will be part of your IPO process, and also offer advice on how to optimize your investment narrative, keep your messaging consistent throughout the IPO process, and build engagement and trust from each of these critical support groups.