Presentations: Preparing To Take Your Company Public – from the archives: IPO
Many of us worry about facing the news media. What will the reporter ask? What should I say? How will my comments be used? How will my remarks affect the way the audience perceives my company and me? If I say nothing, how will the audience perceive us? And on and on.
There is another serious case of presentation pressure that may be even more important – a chief executive taking a formerly private company public. In this situation the CEO must convince a parade of financial experts to buy stock in the company through an initial public offering, an IPO. The additional dollars will fuel greater growth. It is mandatory that the chief executive embody vision and management capability while conveying critical financial information. Talk about an imperative for persuasive communications, this is it. In fact, a post-IPO executive may never fret over media interviews again.
This column is to assist those of you anticipating placing your company in the bright light of an initial stock offering.
The Blue Rhino IPO
Billy Prim founded Blue Rhino Corporation in North Carolina, and the company became the nation’s leading provider of LP gas cylinder exchange for outdoor grills. It has since been sold, but Prim still runs the operation with clients that include Wal-Mart, Lowes, Home Depot, and Sears. Prim took the company public shared part of that experience with me. Remember that IPO’s vary, so consider Prim’s experience a guide, not a map. The investment bankers who chart your course will provide precise directions.
What IPO presentations are not!
Relax. Your job is not to be the next Tony Robbins or Zig Ziglar. Glitz, slickness, and snappy public speaking skills are not expected or necessarily desirable. This is 90% information sharing, not formal presenting. Your challenge is to 1) professionally convey critical insights about your company and its future, and 2) answer specific questions well.
You will encounter two basic audiences with different orientations: 1) a few large groups of small investors, and 2) many lone experts representing big investment funds.
Audience #1 – Large groups.
There are a handful of these gatherings of both small and large investors usually in Boston, New York, and San Francisco. Using computer graphics or other visuals, you and your colleagues explain the status of your company, where you are taking it, and answer questions. Your investment bankers help you prepare for this.
Audience #2 – One-on-ones.
One-on-ones comprise the vast majority (90%) of your IPO interviews. They tend to be large investors who expect you to come to them. You and perhaps your Chief Financial Officer sit down in a small room with a manager of an investment fund. You conversationally guide the fund manager through your strategies, your financials, and then answer questions. Again, exchange of information is paramount, not formal presentation. Your investment banker may not be permitted to participate. This is up-close and personal, and you must know your facts and have good answers.
Billy Prim says these fund representatives conduct many of these sessions daily and follow a routine something like this:
- 30 minutes of remarks by CEO (perhaps 10 minutes of it from the CFO).
- 30 minutes of questions and answers.
Providing a message.
Your remarks should track how your company reached its current position, where it is heading, and how you plan to take it there. This is big picture, vision, and leadership. The CFO may provide particulars. While this can be somewhat elaborate for the large groups, the fund managers in the one-on-ones may not permit a presentation per se. Both of you leaf through a comprehensive handout that you provide. In a dialogue rather than monologue, you conversationally discuss your information in a reassuring, confident, and persuasive manner. Prim says, “The fund managers need to look you in the eye and believe that you can get the job done and run a public business. They are investing in the management team.”
Most of the questions are common sense, but seeking analytical answers. In no particular order, fund managers want you to explain the following and more:
- Competitive barriers (what will keep others from doing what you’re doing)
- Your strategic advantages
- Your biggest challenge
- How you will use the capital from the offering
- How the offering will change your business
- How you will achieve your expectations
- How you will grow your business
- How you will maintain your growth rate
- Your liabilities
Some of the managers are interested in the big picture, while others dwell on details. Just know your business, and be able to convey your knowledge.
With the usual preparation by your investment bankers, there should be few surprises. Billy Prim says he never heard a question not previously asked him by the bankers.
Good luck with your own IPO!