Holding an initial public offering is a significant milestone in a company’s journey, and it requires a cohort of experts to navigate through the process. However, while ample support is available for the planning and preparations leading up to an IPO, many company founders find themselves at a loss on what to do in the aftermath.
Even though the IPO process has concluded, there are several crucial considerations to continue with post-public offering. It’s imperative to acknowledge that the communication with investors must persist even after the IPO is completed.
“Investors want to be educated and nurtured. It’s a process,” explains Alyssa Barry, principal and co-founder of IRLabs. “The infamous quote, ‘Build it, and they will come,’ stands true, but the key word is ‘build.’ You need the team to play; the fans need to be served; the cheerleaders need to hype the crowd; you must nurture fan loyalty; you need to get creative; and the team needs to perform to keep the fans coming back more. Just replace the word ‘fans’ with ‘investors.’”
Here’s what you need to focus on after your company has just completed its IPO.
Stabilizing and Insider Lockup Post-IPO
Following a company going public, the underwriter plays a crucial role in stabilizing its shares in the market. The initial days of trading are highly volatile, and as a result, underwriters work on stabilizing the new stock during the 25 days post-IPO. Measures such as attracting recommendations from analysts and creating a market for the newly issued shares are taken. Additionally, the underwriter may provide additional stabilization support by purchasing some of the new shares at or below the offering price to help balance the order imbalances in the new stock.
Moreover, post-IPO lockup periods are also established for most newly issued stocks, during which company insiders and early investors are restricted from selling any of their shares. This lockup period aims to allow the new stock to settle without additional selling pressure from insiders and typically lasts between 90 to 180 days, a period predetermined during the IPO registration process.
Securing Analyst Coverage
Following the 25-day quiet period post-IPO, the market shifts from relying on official disclosures to external sources for information about the company. Therefore, it’s crucial for companies to promptly engage with analysts to secure coverage of their stock.
Collaborating with communications or investor-relations specialists to connect with financial analysts covering similar companies is beneficial. These professionals can assist in navigating the capital markets, communications, press releases, roadshows, and events and ensure that the messaging is precise.
It’s advisable to target analysts who cover companies not only in the same sector and industry but also in size and other relevant factors. Additionally, laying down a clear strategy and a three-to-five-year revenue plan, including achievable goals, sets the stage for analyst coverage from the onset.
Emphasize Profitability Transparency
Transparency about profitability is crucial. Corporate leadership should
