The Rise of the Virtual IPO Roadshow
What was once considered the hallmark of the IPO process, the roadshow, with its grueling and highly coordinated multi-city presentation schedule, may be the next domino to fall in the line of mission critical events that will actually fare better by going virtual.
Did you just say that virtual IPO roadshows offer a better experience than in-person roadshows? Yes, we did and here’s why.
Enter the Virtual IPO Roadshow
It is a well-known fact that a successful roadshow is often critical to the success of the actual IPO debut. The roadshow’s mission is to generate enthusiasm in order to attract prospective institutional investors. Topics covered include but are not limited to
- Meeting the executive management team
- Unique value proposition and investment opportunity
- Financial performance of the company
- Prior sales and growth projections
- Company history and future plans
- IPO price target
The team at OpenExchange, the preferred global solutions partner assisting corporates and sell-side banking teams, orchestrates these complex and secure series of high-profile meetings and presentations has a unique perspective for the current and post-pandemic world.
If there is one thing that the pandemic has taught us is that we are only limited by our imagination, creativity, and technology available to us.
When the pandemic hit, IPO roadshows, along with all other in-person events, meetings and conferences were abruptly cancelled, postponed or moved to audio conference calls.
The Resistance
This disruption has led to a new way of thinking about how these deals can be executed with great success. We’ve learned about the adaptability of corporates, bankers and investors with some surprising findings. As we all became more comfortable with virtual face-to-face meetings, we came to understand that many of the mental objections we’d constructed in our minds from even considering going virtual were familiarity, coordination, confidentiality and technology.
The Appeal
What makes virtual IPO roadshows so appealing is the coordination. The ease of scheduling, managing changes and handling last-minute cancellations has a knock-on effect in the physical world. Not so in the virtual space. In a typical roadshow, corporate and banking teams would be required to travel to a host of key city locations in order meet with prospective buy-side investment managers. If one manager dropped out, that could equate to a major rescheduling setback requiring additional overnight hotel stays, flight changes, etc. In the virtual world, this requires a simple outlook calendar update as all the virtual meeting details are preserved.
How it works
Corporates and their banking teams are virtually connected together via their boardrooms, hotels or personal residences, but what is different is that the “hotel experience” is now being facilitated by OpenExchange. OpenExchange provides the secure technology to place corporates and their banking teams in a “virtual private meeting room” where they can discuss concerns for each upcoming investor meeting.
Meanwhile, investors are greeted separately by an OpenExchange “concierge operator” who will first ensure and verify proper security clearance with the banking team roadshow coordinators (i.e., confirm if these investors should be in this meeting and at the appropriate time). From there, OpenExchange provides the connection between the corporate, banking team and investors.
Once the presentation is completed, the banking team and corporate can return to their virtual private meeting room to discuss the outcome and any follow-up, as well as prepare for their next investor meeting while OpenExchange prepares for thenext investor.
This innate ability to handle back-to-back meetings seamlessly with OpenExchange’s secure, patented, and ubiquitous platform call-logic connection technology is the game changer for many sell-side banking teams and their roadshow coordinators.
Reservations Not Required
For road show coordinators whose bankers who have spent a majority of their professional careers on the road, going virtual offers a new and liberating paradigm of doing business. Maximizing the efficient use of both the corporate’s and banker’s most precious commodity, time, takes on a new meaning.
So, what is no longer required?
- Multiple hotel and airline reservations
- Private cars
- Seated meals
- Logistics, queues, & lost productivity
Bottom Line Drops to the Bottom
All of the costs associated with travel, hotel, meals and logistics that would have been passed onto the corporate client are now avoided. Though costs for a virtual IPO roadshow pale in comparison to the actual costs of a physical roadshow, actual spend can only be determined by the total number of connections required by the corporate & banking teams and the number of investor meetings.
What investors are saying
The big winners here are also the investors. For meetings that would have usually occurred at the buy-side office, investors can hear presentations, meet and ask questions of the management team from the convenience of wherever they choose to be at that time. Knowing full well that these calls have the security and confidentiality of a private meeting room, investors are free to ask any questions to the corporate or banking team. All of these cumulative interactions lead to a virtuous circle of corporate – banker – investor transparency, security and trust.
The Proof Point is that Virtual is Working
The proof point that this format is working is that deals are getting priced. Since the inception in July 2020, OpenExchange has successfully led over 2,000 IPO roadshow meetings. These roadshows included Equity Capital Markets deals (Traditional IPO’s, SPACs, Test the Waters), and Debt deals.
Profound change
In the current environment — an amazing alignment of conditions that include a willingness for people to meet where they are right now, available network and cloud technologies, and the vision, technology and people of OpenExchange to make this happen — this profound change has become a preferred solution over meeting in person, perhaps permanently.
The Biggest Hurdle at the Moment
The number one challenge most new clients face is onboarding a roadshow facilitator like OpenExchange vis-à-vis the comprehensive client and General Data Protection Regulation (GDPR) guidelines. It’s vital to choose a facilitator that has extensive experience in this space and which is well-equipped to liaise with any CCO, CRO or IT security teams on your behalf.
What’s Next
In the near future, we expect to see interest from our corporates and banking teams to bring back some of the “wow” factor of physical IPO roadshows. That could include fully customized investor experiences, with virtual greetings and presentations from corporates and/or banking team C-suite executives, promotional interactive content videos or secure product information demos from corporates that can be tailored towards individual investors.
In anticipation of this demand, we at OpenExchange recently turn-keyed several broadcast-quality virtual studios specifically to meet those needs. The result is a program that looks more like television and less like a Zoom or WebEx call.
In other words, it’s important to put the “show” back in roadshow, while preserving the huge cost, time, and logistics benefits of the new world of the virtual roadshow.
