The recent success of Viafin Service’s First North IPO in the midst of turbulence in the stock market shows that a good investment story can also succeed in a challenging situation. In spite of the market situation, listing is currently being considered by many companies as part of the growth strategy.
We have been involved as a communications advisor in a number of successful IPOs, but also in a few unfinished listings. From our experiences, we have collected a list of tips for those who are considering listing.
Before a company even contemplates listing, it is important to determine what the company is doing, where it is going and by what means. The company’s strategy must be crystallized and it must be communicated comprehensibly: why will this company in particular continue to do well and what makes it better than its competitors. The strategy is only part of the investor story, which must be not only convincing, but also compelling; mere figures are not enough. It is worth investing in the company’s visibility and public image well in advance – a good reputation is a good companion on the way to becoming a listed company.
The desire of the owners to list the company can and may have multiple motives. The roles of owners and management may be confused, especially in the case of smaller companies. In this case, it is also important to communicate that the owners not only sell the results of their work, but also continue to be involved in the development of the company. Regardless of the different starting points, the company’s board and management are key in implementing the strategy, and investors want to invest in a company with a strong and committed team.
The role of professional investors acting as anchors is highlighted in the fluctuation of the markets as they bring peace of mind to the company and attract others. Therefore, it is important to identify the interest of anchor investors in a timely manner and to invest in both your own sales efforts and experienced advisors. Because of the anchors, the investor story must be considered already in the early stages of the process: nothing can be promised to anchor investors that is not ready to be communicated publicly. An investor story can be refined along the way, but eventually all investors need to be on the same page with respect to information.
Liquidity-providing private investors, along with anchor investors, are an important target group in all IPOs. Private investors are valuable to the listed company and it is worth spending time and effort on reaching them. It is good to promote visibility in both pay-per-view and free-to-air channels, and avoid unsuccessful listing because not enough time and effort was used to promote visibility. When IPO marketing also takes into account the needs and objectives of the business, it is ensured that the invested euros are not wasted.
Not all the companies need the new capital provided by the IPO as sorely. However, investors would like to see that the funds raised have a clear growth-oriented use and this must be clearly communicated. This requires management to have the courage to also publicly commit to uncertain future plans. Product development projects, pursuit of new markets, acquisitions and other uses for assets are therefore an important part of the investor story. The more openly and clearly they are communicated, the better.
Sounding the bell is the starting signal for long-term and continuous investor communications, which should be a natural part of the company’s operations. It is not enough to report to investors only as dictated by disclosure requirements. At best, investor communications are business-supportive and profitable – they serve the company’s customers, employees and investors alike. It is advisable for a listing company to take advantage of this communication opportunity.