Keys to a Successful, Shareholder-Friendly IPO
By Laura J. Finn
September 13, 2019 All Industries
If you had a chance to hear some buy-side tips ahead of your company’s initial public offering, would you listen?
DirectorCorp CEO Al Dominick recently spoke with Kathleen Smith and David Wicks to learn more about the pre-IPO and post-IPO information that senior leaders should know. Smith sits on the buy side as a researcher and an investor at Renaissance Capital, which she co-founded. Wicks serves as Nasdaq Head of Listings.
“In any IPO situation, clear information, good disclosure and accessibility for those researching help level the playing field. [Companies should] give out the same information to all investors,” Smith stated.
Wicks shared that celebrating an IPO is only the tip of his relationship with companies listed on the Nasdaq. After the bell-ringing celebration, he hears from CEOs who have questions about stock surveillance, managing the investor base and how to target new investors.
“This is when our team really shines, when companies are able to utilize the tools we own for these concerns,” he said.
What kinds of IPOs is Wicks seeing in 2019? One growing area is Special Purpose Acquisition Company IPOs.
“SPACs continue to be an important part of the market and out of our current listings: 10 percent are SPACs,” said Wicks. With more SPACs going public, it is more important than ever to communicate with shareholders. “Once you acquire the new company, your investors change and the leap requires strong investor relations,” said Smith.
When asked about the emerging trend of direct listings, Smith again emphasized strong investor relations. “The same good communication applies, and it is even more incumbent to get to know shareholders. Companies are staying private longer and not accustomed to public investor views. After being coddled for seven to 10 years, then going public and losing money, companies don’t always understand the public investor viewpoint” she explained.
Finally, Smith and Wicks opined on the one-share-one-vote movement. “We’ve had super voting shares over the years, especially with media and technology companies. In the long run it’s better to have one share, one vote. It’s better governance,” said Smith, who says that Renaissance Capital focuses on governance issues in all of its research.
Understanding the investor base and meeting those investors ahead of the IPO can put your organization on the path to a successful, shareholder friendly and sustainable IPO.