More and more aspects of business are being conducted online, but according to Forbes contributor Jerry Weissman, the “personal” part of interpersonal communications is still essential — especially in initial public offering (IPO) roadshows.
Simply put, an IPO roadshow is a presentation given by a representative of a company to potential investors about an investment opportunity. Many companies in the United States start planning a roadshow in January — about 37% of them — and they usually take place in the months of February, March, May, June, September, November, and December.
These roadshows are instrumental for generating interest in a company and getting seed investments; according to Weissman, the average public offering is about $150 million. Since investors are limited to buying 10%, one presentation has the potential to result in a $15 million dollar investment.
Since 2005, IPO roadshows have been required by the Securities and Exchange Commission (SEC) to make their presentations available to the public online (which is done on a website called NetRoadshow). Investor roadshows can also be done over the phone and by webcast, but Weissman says that one of the keys to a successful presentation is the personal element.
Smart investors simply do not want to invest in a company if they have not met with management, been able to look them in the eye and, as Weissmann puts it, “press the flesh.”
“The human overlay is critical in making an investment decision,” commented Beth Kurth, President, Corporate Forum. “The financial statements provide the data, but a face-to-face meeting with company executives helps investors form the data into useful information. For example, how will the balance sheet support the strategic initiatives, how does the P&L reflect the company’s successes to date?” She continued, “That’s why we see so many executives continuing to ensure the personal element is part of their investment community outreach even beyond the IPO. These leaders know that virtual meetings allow for an almost unlimited quantity of actions, whereas in-person meetings offer unparalleled quality of interactions.”
Even with the ability to access presentations online or through other virtual avenues — like the phone, webcast, or video chat — CFOs and CEOs still spend an average of about 20 days on the road, and conduct between 70 and 80 face-to-face meetings. Though the convenience and cost efficiency that may be found in virtual communication might be attractive for IPOs and CEOs alike, the importance of the personal element still prevails.