Post-IPO Communications: What to do After the Honeymoon is Over

Michael Fox, Managing Partner, ICR

While completing an IPO represents the culmination of a lot of hard work and planning (not to mention the effort it took to a build a company with sufficient size and growth prospects to go public in the first place!), it is actually very much the beginning of the journey and not the end.

Much like the lead up to a wedding, there is a period of courtship and initial bliss, followed by a huge party. But the honeymoon will soon be over and the key to successfully operating as a public company going forward – much like a marriage – lies in communication. In fact, SNAP CEO Evan Spiegel, recently observed that “One of the things I did underestimate was how much more important communication becomes.”

Long gone are the days when CEOs or CFOs could issue a press release or make a statement and have it be taken as gospel by shareholders, customers, employees and other stakeholders. Now, communicating as public company has become a full contact sport involving SEC regulations around communications, analyst reports opining on company prospects, 24X7 financial media, bloggers and other influencers sharing their opinions, not to mention event-driven hedge funds, short sellers and activist investors, all in a hyper-connected echo chamber where information is instantaneously available to all.

To manage this process, companies must go on offense and control the narrative. If they don’t tell their own story, someone else will tell it for them, and they will not like (or sometimes even recognize) the result.

It starts with the CEO outlining a long term vision of where the business wants to go over time and consistently updating stakeholders on its progress through multiple layers of communication. Beneath the grand vision needs to be a clear strategy with benchmarks, including financial metrics, that are achievable over time – under promise and over deliver. Employees want to know the big picture and how they fit in. With investors, the magic lies in setting expectations, exceeding them and then slightly raising the bar, and repeating the process over and over again.

The danger lies in taking communications for granted. The “numbers” actually do not “speak for themselves.” To be truly understood, they require context, texture and color commentary.

This needs to be done and reinforced over time through consistent communications at investor events, in one-on-one meetings with shareholders and proxy voting committees, through regular employee meetings and electronic communication, active engagement with the media, a robust presence on social media and proactive outreach to regulators, government officials and others who you do not want to be meeting for the first time when something goes wrong.

And things will go wrong, so companies need to have a plan in place to communicate. And when they do, leadership must be willing to acknowledge mistakes, quickly take responsibility and outline the plan for corrective action moving forward. Many a strong company has destroyed goodwill, reputation and valuation by stubbornly and arrogantly refusing to acknowledge what everyone else sees, by simply apologizing and moving on . . . which my wife tells me is key to a happy and long-lasting marriage.

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