The Ins and Outs of Preparing for an IPO: Phase two (C)

This is the sixth in a series of posts: The Ins and Outs of Preparing for an IPO -What Your Company Needs to Know. 

Phase II – Executing an IPO


Investor relations and the IPO marketing process 

As a company transitions from private to public, a strong investor relations team is essential in sustaining market interest, communicating with shareholders and the public, and attracting a new pipeline of investors. The IPO marketing process can be divided into three distinct segments, including pre-marketing, the road show and pricing.

Prior to filing a registration statement and publishing a preliminary prospectus, the investor relations team will develop and carefully cultivate the company’s image by communicating the right message to stakeholders and the media regarding its equity position and the upcoming IPO transaction. This will require keeping a variety of disclosure vehicles, including annual and quarterly reports, proxy statements, press releases and direct mailings.


The road show and pricing the IPO

A road show, which generally lasts about two weeks, is a critical event in the IPO journey. Institutional investors tend to rely heavily on the information presented at the road show meetings. “The road show will likely be the only time a company’s senior management actually communicates directly with potential investors, and therefore represents a crucial opportunity to convince potential investors to invest in the offering, according to EY.

Prior to launching the road show, an IPO candidate must file the principal offering documents, including  a prospectus, which is then filed with the SEC; and the road show slides, which together with the prospectus,  are used to market the offering.

Download our S-1 registration workflow chart for a visual understanding of the SEC commenting period.

CLICK HERE to download our S-1 registration workflow chart for a visual understanding of the SEC commenting period.

The draft prospectus, which is filed with the registration statement, is then open for material comment by the SEC. There are generally several rounds of amendments to the registration statement. Once the SEC’s comments have been resolved and the registration statement is complete, the road show is launched.

This is when senior management presents its “slide show” in a series of meetings with investors, often held in multiple cities on the same day. A slide show generally consists of a 25-minute presentation emphasizing the company’s selling points and investment merits. When drafting a slide show, the IPO candidate needs to keep two audiences in mind: the sales desk of the chosen broker, and the institutional investors on the road show.

Once the underwriters have lined up a number of prospective IPO investors, the underwriters, alongside the company’s board of directors, set the price at which they agree to sell the shares.

According to Inc., “The IPO will typically close on the fourth business day after the pricing. At that time, the issuer and any selling stockholders will release the shares to the underwriters, and the underwriters will purchase the shares.”


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