You’ve gone public, now what? Disclosure, aftermarket support & social media guidelines
27 August 2013
Yesterday, I compiled and shared some interesting details from the first part in a two-part series of webinars hosted by CommPRO.Biz entitled: ‘Ready, Set, IPO’. Where our CEO and Founder, Darrell Heaps got a chance to weigh in with other panel members on some key considerations for companies to keep in mind in the process leading up to their IPO.
I had the pleasure of partaking in the second webinar entitled: ‘The IPO and Beyond’. Where the panel discussed various topics such as disclosure training, how to effectively use social media to increase awareness in the investment community, and insuring deep after-market support to name a few. What follows are the takeaways from that conversation:
Areas of Focus from the first day of trading
• Opportunity to brand the company in the aftermarket.
• Formulate strategies for using the media outlets to build awareness among key constituents.
• Work with lawyers to ensure no new information is shared in the market for the first 25 days post IPO.
• Conduct a perception study with investors who did and did not buy shares, to compile feedback to see if there is any misinformation in the market and whether management and the street’s expectations are consistent.
• Use the feedback to help formulate an effective IR strategy and ensure that the impactful and credible after market messages are incorporated in all IR and corporate communications materials.
• Review the shareholder base and make sure it’s appropriate for devaluation, market cap, growth prospects and dividend policy.
Working with institutional investors post-IPO
• Manage the amount of information a potential investor is getting – that is, use the feedback from those who did and didn’t invest to ensure consistent messaging.
• Build a rapport with those who didn’t invest by following up with them and keep in touch (not just during quarterly earnings) as they may become interested in becoming a shareholder at a later point in the company’s life.
• Use different mediums to stay in touch with investors so you stay on their radar.
What about retail investors? Are they worth the time and how do you manage them?
• On average, retail investors run about 30% of the stock market – so they definitely do matter.
• This figure goes largely ignored because they are hard to reach – technology today, such as social media lets a small group of people effectively manage a large group of people.
• As the tools are available, there is a culture and a norm for people to use the technology to be able to communicate with companies and companies will want to communicate back.
• Retail investor conferences can be an effective way to reach ‘qualified’ individual investors. Many facets including the level of questions that is, very thoughtful well-informed questions from retail investors indicate they are worth speaking with.
• Companies need to get past the stereotypes of retail investors, where they sit and share information (anonymously) on message boards. They have become sophisticated and are on credible portals like StockTwits.
Using Social Media to increase awareness and reach investors (there was quite a bit of discussion on this topic)
• Monitor conversations and take steps to engage in social at your own pace and then accelerate the process.
• Research shows that Twitter is one of the first channels that companies are using to share information – typically see them linking back to a press release (previously disclosed over a recognized disclosure channel) that resides on their website.
• Some companies have a Twitter account specifically dedicated to IR – this can help sift out all other messages.
• Use all channels consistently so your investors know that they are a trusted place to get the same information whatever channel they choose to consume your materials (it’s also a good idea to list the channels you are using on the homepage of your website). Otherwise, how else will they know where they can find information?
• Companies with minimal news flow can use social to share information that would be useful for investors such as industry-related articles.
• Traditional media can still be relevant but reporters don’t always get the story right. Companies should focus on the social aspects of getting their story out there, because you have the ability to get it right all the time because in the social world you can control your message.
Mechanisms to create strong disclosure practices
• Ensure you understand how to use the 8-K – that is know what you need to include. Don’t be afraid to ask your legal counsel – it’s what they get paid for.
• Put together a disclosure policy – look at the financial and non-financial information that needs to be disclosed and how to do it in a transparent and credible way (one way to do this, is to speak with investors to gain an understanding of how they view the company and their expectations in terms of not only earnings, but the company moving its’ strategy forward).
• Creating a social media disclosure policy that tells investors how you intend to disclose whether it’s through traditional disclosure channels or social media.
• Whatever channels you use be consistent – and if you post one press release then post them all on all of your channels.
Repairing a broken IPO
• First, you need to understand why the stock is trading below the offering price. Is it an industry issue? Specific to the company?
• Speak to the street, understand their perceptions and understand why the stock is trading.
Mitigating a crisis
• Be truthful and forthcoming – explain how it’s going to fit into what you already said or in terms of your business.
• Respond as quickly as possible (but don’t be defensive) and be the voice of authority.
• Be prepared to respond in the same channels as the information is being spread. Use all of your channels to amplify your key messages.
• Some crises may be predictable, for example missing earnings. So craft key messages in advance.
It was a real pleasure to be a panelist on the webinar. Again, if you missed one or both of the webinars, you can listen to the replay and/or read the transcript here:http://www.commpro.biz/investor-relations/ipo-boot-camp-2013-a-two-part-free-webinar-series/.