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1. Get to know investors early and often. There is always a question of how much or how little a company should get in front of potential investors. While there is no magic formula, our speakers agreed that staying visible is critical. Maintaining an ongoing dialogue with current investors while making introductions to new buy-side accounts is key. Clinical updates, updated news flow, and key hires were all cited as reasons to reach out.

2. Build relationships over time with bankers and analysts. Similar to the buy side, it’s just as important to build a relationship with your investment banking partner over time. Beyond the bankers, seek out several meetings with the analysts and the Equity Capital Markets (ECM) desks – they are vital members of your transaction team. When asked how to assess a quality ECM desk that will work hard for you on your transaction, our CFO suggested calling around to other CFOs to see what their experience had been. In other words, do your homework and check references.

3. Set expectations appropriately for your stakeholders. Everyone seems to have advice when you are on your way to going public. Our experts suggested maintaining some independence when it comes to the composition of the Board. Getting on the same page as the Board – especially with regard to valuation – is important too. Also, sometimes a Board can get enamored with specific investment banks, but our VC guest emphasized that being strategic when picking the cover should be a priority. Think about support after the IPO: Which banks will likely be there to guide you when you’re public? And which analysts know your space the best (because that’s who the buy side listens to)?

Additionally, when it comes to actually pricing the transaction, try to have preset expectations with your bankers as to what you would like the book to look like. Consider things like the percentage of shares you want placed with top accounts; whether there are priority accounts that you really want to own your stock; what your view is on upsizing the deal and the greenshoe; and how important price is to you. Have the discussion early and not at the last minute when there is a time crunch.

4. Plan for the unexpected. Our experts stressed the importance of having a backup plan if things are not as strong as you hope. During the IPO process, have discussions with insiders to get a sense of what they are thinking. Get an idea of what is going to happen after the lock-up comes off and try to find ways to manage that process.

5. Reverse mergers are an option to get public but only under the right scenario. In response to a question about reverse mergers, our experts said that if you can get public the regular way, it’s best to do so. If there is significant cash in a shell and a reverse merger is your best option, it is doable, but it can be time-consuming (taking up to four or five months) and it can be challenging to get in front of top-tier investors. Another factor is the lack of research support that’s common for such transactions.

A lot of things need to go right for a successful IPO.

Feel free to reach out to MicrocapHelp with questions on how to best position your company for an optimal outcome.

#IPO #pucbo #publiccompany #privatecompany #reversemerger

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