The IPO process transforms the communications cycle, even for long-established private businesses
Just two months into the fourth quarter of 2015, more than 50 companies have filed for an IPO. As these companies hit the open market, their management teams are putting themselves in a position to take advantage of amazing opportunities to raise capital and enhance their corporate prestige.
As soon as the opening bell sounds on pricing day, millions of new investors – as well as hundreds of sell-side analysts and influential journalists – can now lay their eyes upon critical details of these newly public companies so they can understand what they do and how they profit. It’s an exciting and scary time for senior executives and corporate communicators alike.
The IPO process completely transforms the corporate communication cycle, even for companies that have been established on the private market for decades. The need for companies to adapt to this change is not unlike that of network news with the advent of the 24-hour news cycle. Market shifts and other critical developments can strike at 1.00 am, hastening the need to respond to external events rapidly. Companies whose corporate communications and web development teams work traditional hours may find themselves ill equipped to respond when that happens.
Industries that are used to higher barriers of entry are the most liable to fail to meet evolving communication challenges posed by the transition to capital markets. A government contractor can no longer fill its website with jargon that mystifies people outside of a Department of Defense procurement office when Wall Street starts to scrutinize it as much as the Pentagon does. Biotech marketers may find complex scientific explanations of their value don’t cut it now that hedge fund managers without medical degrees are defining the perception of their companies.
When a company goes public, the base of key stakeholders evolves beyond the usual business constituencies. Senior management teams now have to run their companies according to the whims of corporate boards, buy-side and sell side analysts, debtholders, the media, consumer groups, environmentalists and government regulators with new compliance demands and new points of transparency into these companies.
All of these people use blogs, news releases, financial news sites, Bloomberg terminals and business cable channels to find out about the companies they care about. As the sources of information and types of interest groups diversify, most companies still have a single port of call to take control of their narrative in real time – their website – and the people in charge of these websites now find themselves in need of a multi-tiered strategy just to keep pace.
C-suites understand that going public combines the possibility of millions of new people who can provide capital with the uncertainty of ownership changes in the future. The fact that anyone with enough cash can buy as much stock as they want means the C-suite could lose control of the very entity it has built. Similarly, as millions of new eyes greet public companies for the first time, mishandling the new corporate communications landscape could mean losing control of the narrative, which could threaten the equally hard-earned corporate reputation.
This article was originally published on the Investis’ blog. Adam Tannenbaum is an associate director at Investis