With the transaction out of the way, it might be tempting to relax and continue with a business as usual mind-set. But once your company goes public, the real work of running a newly public company begins. From our experience, if the company wants to excel in the market, it should keep moving forward with a consistent – if not amplified – pace.
Unless the market’s interest in the company is properly and carefully maintained after the IPO, the initial euphoria and press interest will quickly fade. The trading volume and value of the company’s shares may also decline.
This means an aftermarket strategy is vital to maintain the value and benefits of going public. Almost as soon as the IPO is over, the process of retelling and fine-tuning your company’s equity story begins.
Meeting – and managing – expectations
The public markets are an unforgiving place. Management must strive for accuracy in projections and forecasts so that targets are being met quarter after quarter. For a public company, a single negative news item that is not well managed by the Investor Relations (IR) function can have a significant impact on stock price.
But now that you’re public, you also need to remain in the public eye to maintain investor interest. Through ongoing dialogue, conference attendance and non-deal road shows, you should cultivate an open channel of outreach to potential investors and for targeting sell-side analysts from a broad universe of firms.
Today’s share trading is dominated by many high-speed global networks and remains a fast-moving environment with higher demand for faster IR response to investors’ requests. This means you must develop a proactive IR strategy that will attract the optimal ownership mix and long-term pipeline in the aftermarket – targeting the type of investors that will maximize liquidity and valuation.
High-performing companies delegate key communication responsibilities to their IR team. The IR officer will help to build your strategy and guide communications to stakeholders and the media throughout the entire process of launching the IPO – and after going public.
Sustaining your strategy for success
Private companies are often unaware of the level of accountability and scrutiny faced when going public. They often underestimate the time and skill needed to court a new pipeline of public investors and to maintain aftermarket support. Being newly public, you acquire a new range of stakeholders that will demand and require much greater transparency in your business.
Growth is the key driver for market leaders. Investors prefer companies that plan to use the IPO proceeds to accelerate growth, whether through expanding their operations, moving into new geographic markets, acquiring other companies, developing new products and services, enhancing marketing and branding or upgrading technology and infrastructure.
Market outperformers deliver long-term shareholder value by demonstrating consistently effective investor relations and finance functions and, most importantly, operational excellence.
The efforts that companies put into getting the business ready for public life is invaluable, but from our experience, this is only the foundation on which success is built. It’s vital to thoroughly prepare for an IPO and a sustained post-launch.