IPO Communications Guidelines That Make Good Sense

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GM-NYSE-listed-720x340It’s the dream of many public relations professionals:  land a position with a promising pre-IPO company. Take less base compensation and sacrifice weekends and holidays for the promise of mainlining a gold vein of stock options and sailing off to the Caribbean following a robust IPO and the requisite vesting period.

Ah.  If only it was that easy.

The reality is that the PR pro in a pre-IPO company has enormous pressure and responsibility to ensure that his/her organization is playing by the IPO communications rules of the road. The job can be like herding cats.  A single communications misstep can be extremely costly to the organization, and of course to communications leadership.

2013 is actually turning out to be a banner year for IPOs in the U.S.  According to the czars of IPO research at Renaissance Capital, 165 IPOs have priced so far this year — that’s a near 50 per cent increase over 2012. In addition, a whopping 208 IPOs have been filed with the SEC year-to-date, more than 75 per cent than a year ago.  And the average IPO has returned almost 30 per cent from the offer price.

Twitter, as the galaxy is aware, is expected to complete its IPO process before the end of the year, possibly by Thanksgiving. Its recent decision to fuel the IPO frenzy is having a significant and positive impact on other recent IPOs as well, like Rocket Fuel Inc. and FireEye Inc.  Their stock price has doubled since their IPOs less than one month ago.

Going public has many pluses.  Among the benefits is the opportunity to earn significantly more interest and coverage from business and financial information channels, major newspapers, business magazines, television, radio, financial and business websites, among other media outlets.

However, the benefits of enhanced publicity come with the increased responsibility of communicating appropriately, leveraging new-found media attention to support strategic business goals while playing by fair market rules and maintaining corporate transparency.

Much of this enormous responsibility falls squarely on the shoulders of the organization’s communications leadership. Remember the companies in the dot.com boom that screwed up their IPOs by inadvertently leaking confidential information that found its way to the media and then the SEC?  That’s a sure-fire for the dream to become a nightmare of epic proportions.

Here are a few guidelines for PR  pros and their pre-IPO companies that will help dreams come true:

1. Prevent official and unofficial spokespeople from telling external sources your company intends to go public. Regardless of when it’s said, it can be published during the IPO quiet period and will look like SEC rules have been violated. Instead, focus on the company’s growth story.  Talk about financing as an adjunct that facilitates growth.

2. Develop a story that describes your company’s competitive advantages and barriers to entry without industry jargon. Keep it simple and do it well in advance of the IPO as it will serve as the basis for your corporate description in the prospectus.

3. Strengthen your website. During the quiet period, your company website will speak for you to industry influencers and potential investors.

4. Stay visible.  Typically, visible IPOs price higher in the range and trade higher afterwards. Don’t focus only on the Wall Street Journal and other national publications. Industry trade publications, bloggers, industry and Wall Street analysts are also excellent visibility creators.

5. Be visible now or company attorneys may say “no” after you have filed. If you haven’t been active before the filing, it will be difficult to be active once you have filed.  Even if you have been active with the media before the filing, many attorneys will take an ultra-conservative position and still try to prevent the company from being visible.  Challenge their position by sharing the many examples of companies who got their cake and ate it.

6. Once your company has gone public, employees have no right to material information before other shareholders. Make sure your company employees understand the rules. Be prepared to circulate policies that explain how to handle material information and how to avoid insider training.

7. IPO day is the beginning, not the end, of communications. Use the remainder of your quiet period to plan your debut as a public company. Decide what your publicity stance will be on the first day of trading.

8. The first nine months of being public will prove whether you can properly forecast your future for Wall Street. It’s easier to keep your good reputation than try to rebuild it.

9. Look to bellwether companies outside your industry for best communications practices, and not only to your competitors.

10. Work with your company’s attorneys and advisers to fit your desired business strategy within regulatory rules.

11. Get your corporate legal and investor relations teams involved in social media to protect the company from violating disclosure requirements. The risks simply don’t outweigh the benefits.

Oh, and good luck.

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