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Sep 27, 2022

IPO prep: Scenario planning and explaining your resilience – Nasdaq’s advice on appealing to investors in challenging times

Christopher Anselmo, principal on Nasdaq’s IR Intelligence team, talks IPO prep and the need to ‘lock in’ your IR talent early

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After the record-breaking IPO year that was 2021, things have been ‘markedly’ slower so far in 2022 ‘amid inflationary concerns and a challenging global geopolitical environment,’ says Christopher Anselmo, principal on Nasdaq’s IR Intelligence team. Although he notes that there is ‘no rush to go public’ given the amount of capital in the private markets, there remains a ‘healthy’ pipeline of companies ready to list.

What is also different this year is that Anselmo expects the window for deals to open and close more frequently – making it all the more important for companies that want to list to be well prepared. ‘Once market conditions improve, uncertainty is removed from the market and sentiment from institutional investors improves, we tend to see more companies come to market’ he says.  

Christopher Anselmo, Nasdaq
Christopher Anselmo, Nasdaq

Locking down IR talent – and communicating risk

Part of being ready to list increasingly involves having an IR person on board before the firm goes public, and Anselmo describes IR talent as being ‘in demand and evolving’.

‘Due to the high demand, it is beneficial to lock up IR talent early to build consistent messaging and cadence with investors,’ he advises, adding that bringing IR on board also frees up management time as a company readies its IPO.

‘We still see most of the IROs coming from internal sources, due to the familiarity of the company and sector. But there is a growing pool of external candidates who bring unique financial experience from sell-side and buy-side firms as a well as a multitude of other backgrounds.’ 

‘Finding the right person can be time-consuming and that is the number one reason why many companies prefer to hire an agency to help with the process. Both paths can be successful so companies need to identify desired outcomes and chose which is the best fit.’    

When it comes to investor communication ahead of going public, Anselmo advocates an up-front approach – particularly given the continuing challenges in the market.

‘Growth rates and margins have been a focus for investors: recession and inflation concerns have curbed investor appeal so it is important for companies to explain their resilience to those macro concerns,’ he says.

‘Frequency of outreach matters, as well as messaging. It is important for companies to tell their story to investors to capture their share of assets when investors start pulling money off the sidelines. In challenging market conditions, we’ve also seen an increased use of scenario planning and communications to give investors greater clarity.’

Among the many offerings companies can lean on through Nasdaq’s IR Insight service is benchmarking by sector and market cap, CRM software, targeting technology and a conference calendar – all tools that help bring deeper insights to your messaging as well as helping companies make their messaging work harder.

The right IR Insight

More broadly when it comes to IPO prep, Nasdaq provides companies with a checklist to help ensure they are prepared to access the market when the window of opportunity presents itself. 

‘One of the most important steps is to identify counsel and auditors and determine roles and responsibilities for the complete list of matters pertaining to an IPO, such as the structure of the IPO, registration statement, offering and overview of the company’s governance framework,’ explains Anselmo.

‘There is a lot that goes into an IPO, as our checklist will attest, but one of the pitfalls some companies fall into is focusing too much on the IPO and not enough on life as a public company. The IPO is only the first step in a long, successful life as a public company.’ 

And once the listing is complete and that life begins as a public company, firms are faced with a slew of crucially important firsts – from their first earnings call to their first investor roadshow. Companies will also have large liquidity or funding events that can also influence the trajectory of the stock.

Nasdaq’s IR Insight and other advisory teams not only work with firms through the IPO process but also remain partners in a company’s life on the public markets, offering a purpose-built IR platform to streamline workflows, access premium content, engage shareholders and measure your ROI, allowing companies to monitor and benchmark themselves against as well as transcripts and deep-dive analysis a company can leverage.

Coming out strong

Anselmo’s key message throughout is that when it comes to both pre-IPO prep and life as a listed company, it is all about preparation and coming out strong – particularly in today’s challenging environment. What is clear is that as intensive as going public is, it is the beginning of a journey that includes everything from roadshows to regulation, corporate access to growing your sell-side coverage.

Having the right investor relations focus is a key to success across all areas of public company life and the data that Nasdaq’s IR Insight provides is the foundation and the fuel for an IR program that works for your company.

Staff Writers

The staff writers on IR magazine are from our team of highly experienced journalists.