Protecting Reputation in the Media
The IPO for any business represents a significant milestone and can be a turning point in its growth trajectory. It presents a golden opportunity for a business as it enters the public markets to tell its story to the investment community via the financial media.
Businesses looking to IPO and attract funds will of course want to create a positive perception in the public domain since this will ultimately have an effect on the .sentiment and interest of potential investors and stakeholders, and indeed the share price (in the aftermarket). So how does a company achieve a balanced profile in the public domain, safeguard its reputation in a sceptical market and ensure the business is well understood?
The first thing to note is that the financial media in London are usually well connected with analysts, fund managers and financial advisers. They tap into their contact book to form an opinion of a company or an issue which can then influence the tone or angle of an article, be it positive or negative.
The media strategy must be carefully considered and will obviously vary from one business to another but there are some common areas companies need to focus on to address the current investor and media sentiment in London . In this article I will cover some such areas, based on our experience from working with companies across China and Asia Pacific.
The simple answer to creating a positive perception lies in detailed planning. A company must set the tone and tell its own story to avoid the media doing this on their behalf. Therefore careful preparation across all IPO documentation and communication materials is necessary. Crucially, and well before engaging with potential investors and the media, a company must ensure that the most difficult questions can be answered.
Important areas to be considered are:
This is a very sensitive and topical issue for investors and the med ia regard less of where the company is domiciled. Corporate governance is now a strong focus for investors as it is perceived to be a benchmark for how well companies are structured and run. The responsibility of corporate governance lies with the Board of Directors who set out strategic objectives, provide supervision to the management team, head up various committees and ensure the values of the business are maintained. They, in turn, answer to
the shareholders of the business. A company’s Board composition is therefore important and the public will be looking for what an individual brings to the business and, better still, whether he or she has a strong reputation in the UK for ensuring high standards of corporate governance. A strong Board and solid structure will demonstrate a company is willing and prepared to embrace life as a listed company and, importantly, that it understands its obligations to shareholders.
Making the investment case
The company needs to answer one question “Why invest in us?” While the market continues to remain challenging for fundraising, money is readily available to companies which can demonstrate a strong business case and a focused growth strategy. Potential investors and the financial media will need to understand the business, its objectives, growth plan and, most importantly, how it intends to use the funds raised in detail. The management team will therefore need to consider carefully a deliverable set of objectives and demonstrate the ability to manage expectations.
The key messages should resonate throughout all the IPO documentation and communications material pre and post listing. A carefully crafted, clear and focused investment case which can be consistently repeated will not only create a solid understanding of the business, it will also position the company well amongst stakeholders.
Why London and not the local Exchange?
In our experience, this is the single most common question asked by investors and the media. The most popular answer to this question is that it improves the corporate standing of the business. While th is is true, the financial conununity is now seeking a more compelling answer to this question. It is advisable to state other reasons such as the company is looking to expand internationally or perhaps the particular sector is well understood in London. The answers should be pertinent to the business and it is worthwhile answering these as fully as possible to strengthen the company’s investment case and demonstrate the listing is part of
a long term growth strategy.
Rehearse, Rehearse, Rehearse
The business has one opportunity to shine and attract the investment it requires to take it to the next level of its development. There are a number of communication materials that need to be prepared during an IPO and these must not only satisfy regulatory requirements but also ensure all the key messages are consistent and emphasised throughout. If a company is undertaking a roadshow, l would highly recommend the management team spend significant time rehearsing the investor presentation and practising Q&As in order to prepare for those challenging questions which are likely to arise.
It goes without saying that investors and the financial media are seeking out companies with the right credentials and in our experience it is those businesses which go the extra mile in planning and setting out clear and achievable objectives that enjoy the most success as a listed company. A positive public profile and strong reputation will naturally follow.
There are a number of communication issues and materials that need to be prepared to ensure a positive company profile and these will differ for each company but the principal areas to be considered are:
- A clear communications/media strategy which takes into account business objectives and risks, potential leaks, timing and external factors/events
- Good corporate governance e.g. sound Board structure as well as policies and processes in place
- Clear and focused investment case with key messages which can become the foundation of all communication materials
- Carefully consider every objective which is set out and put in the public domain as the Board will be held accountable and expected to deliver on them
- Clearly identify the unique selling points within the business e.g. any proprietary technology, and ensure this is communicated
- Understand and be able to explain the position of the company within its sector and its competitive advantages
- Spend time and resources on the company’s “shop window”: the website which will require an investor relations site
- Preparation is key in terms of developing a comprehensive Q&A and committing adequate time for investor presentation rehearsals and Q&A
- Enhance corporate reputation by engaging with the media only at the right time