IPOs came roaring out of the gate in 2018, only to smack into a long-awaited stock market correction. Nonetheless, signs for some sectors, such as tech, remain encouraging. Seeking Alpha notes that “The tech sector’s average return is 25% from IPO,” and The New York Times forecasts an “IPO wave” in Silicon Valley.
Making those offerings work, however, can depend on an often overlooked ingredient: executive thought leadership.
A recent conversation with Moira Conlon – who as President of strategic communications firm Financial Profiles has helped a wide range of companies through successful IPOs – revealed four key considerations for leaders dreaming of public offering nirvana.
Established thought leaders need not be so quiet during IPO quiet periods.
If company leaders aiming toward an offering think of communications at all, it’s typically because communicating can become problematic during the mandated “quiet period” before an IPO. However, as Conlon says, “Yes, you do have quiet period regulations. Still, if you’ve established a precedent of doing thought leadership – media interviews, speaking engagements, webinars, a broad range of things – you can continue to do those throughout the quiet period. That’s a real benefit of getting started early with thought leadership, but it’s kind of minor.”
Sharing your best thinking simplifies a complex IPO sell.
That first benefit is only “minor” when compared to an even larger IPO advantage that thought leadership creates: it makes it easier for investors to understand the sometimes complicated innovations on offer. According to Conlon, “The real benefit is the value that gets created by investing in thought leadership and building awareness for the company, its brand, its products and technology well ahead of the IPO, so that all gets appreciated in the IPO pricing. That is really the big payback.”
That’s the ideal – but it doesn’t always happen. “We work with companies that haven’t done a lot of thought leadership, but probably should have,” says Conlon. “Take the cleantech sector, where a lot of companies have tried to go public but failed. One reason is because they have a very complicated technology that needs to be ‘due-diligenced’ and validated ahead of time. But they go out on an IPO roadshow and the investors say, ‘I can’t figure this out. I only have two weeks to decide if I’m in or out – so I’m out.’”
Conlon adds, “Thought leadership in the pre-IPO period can be very, very helpful in educating investors on all aspects of the company, getting people to follow your company and making it easy for them to investigate all they need to know well in advance.”
Visibility creates essential management credibility.
It’s not enough, however, to simply publish white papers or corporate blog posts. Turning your intellectual capital into real currency requires conveying the power not only of your thoughts but also of the thinkers behind them. Ideally your C-Suite will be a consistent public presence via videos, podcasts, bylined articles, speaking engagements, webinars, and even books.
“In an IPO, as in any equity investing, management credibility is at the top of the list of investment considerations. By building a corporate profile for your leaders ahead of going public, you avoid showing up at your IPO roadshow meetings with investors who’ve never met you. Thanks to your thought leadership, they’ve already read about you, seen you on video, perhaps even heard you speak at their investor conference on some trend in your industry that’s highly relevant to them.”
Thought leadership gets people to buy because it doesn’t sell.
The biggest barrier to achieving the above may well be misunderstanding what thought leadership actually is (and isn’t). As Conlon counsels, “It’s not about selling the company directly. So when a CEO comes to us and says, ‘I really want to get a great media story on my company. Our whole team has worked so hard, and we have fantastic results,’ that’s all fine, but the issue is that it’s almost impossible to get a feature story like that today. The best opportunities out there to promote your company are through thought leadership – having opinions and insights on where your industry is going.”
Providing helpful industry insight and information draws people to you. They get to know you and your thinking. They see for themselves the value you offer and, in essence, begin to sell themselves.
Thought leadership can’t be an after-thought.
In short, if you run a company looking to go public in the future, establishing yourself, your leadership team and your company as leading thinkers in your space can provide major advantages. The key word, however, is “establishing.” It takes time and consistent effort to establish awareness, credibility and (hopefully) a following as a true thought leader. Which means that there’s no better time to start that effort than right now.