December 7, 2017
Big Picture: Digital shines the IPO spotlight on reputational assets
Executives ignore a company's reputational assets at their peril in IPOs, particularly in the digital era when mistakes can go viral rapidly.
An initial public offering (IPO) is quite likely to be the first time the reputation of a business and its management team is tested.
Not only is it an invitation to investors to vote with their wallets, it is also an opportunity for media, analysts, employees, politicians and any other stakeholders with a view to make their opinion felt. The company quite literally becomes public property in a way that can be disconcerting for executives who have previously been narrowly focused on delivering for private backers.
It is surprising how few management teams recognise that simple truth while even fewer will have taken the time to consider what their reputations with each of their stakeholder groups is like and how it could affect a potential IPO. Businesses typically don’t worry too much about their reputational assets or consider investing in supporting them even as they are tidying the rest of the business for an IPO.
That is a mistake. Leveraging strong reputational assets can be a hidden source of value in the IPO process – strong working relationships with suppliers, excellent terms with unions and a strong reputation for reliability with customers are exactly the kind of additional evidence that analysts and investors are looking for to back up the investment thesis. This positive reputational content can be fed into IPO documents, such as the prospectus or website, to communicate them to stakeholders directly.
Conversely, issues emerging with a neglected stakeholder group can spell trouble for the sales process. Failure to engage with critics of a company’s environmental record, deafness to political unhappiness, poor management of potential supply chain problems or worker issues overseas can all emerge during the IPO process. Why? Because before. nobody cared. Now suddenly all these groups have an audience and they know full well that gives them leverage.
Before embarking on an IPO process, we recommend a full reputation audit, looking not just at the potential risks but also the opportunities that could help drive value.
That means identifying and assessing all stakeholder groups ahead of an IPO and devising reputation management strategies for each of them throughout the process. All stakeholders have a voice on social media and in today’s hyper-connected world stakeholders listen to one another, forming a community of influencers who will need to be addressed individually but not in isolation. A coordinated approach to managing stakeholders is vital.
This should include, at the very least, developing a relevant and appropriate social media presence so that channels of communication can be established, a mapping exercise to identify the footprint of stakeholders on social media and the influencer leaders among them and a social listening exercise to identify the issues of concern.
Addressing the issues that matter to stakeholders through the development of relevant content and leveraging social media assets to ensure key audiences are exposed to them should all start well before an IPO process and should do so for legal reasons – if it is established “normal” activity then it can continue during the process, if not lawyers may deem it “conditioning the market” and call a halt.
Similarly, companies should start their media engagement long before a formal IPO process, depending on restrictions such as those related to engaging with US-based media during a listing.
As part of a co-ordinated process, it is important to raise awareness of the business to ensure that all potential investors have heard about it, as these first impressions matter and can shape opinions ahead of roadshow meetings. This can be doubly important when there is a retail offering and non-financial media need to be considered.
Thinking creatively can pave the way to a reputation-enhancing article, such as the chief executive taking a journalist around a high-tech factory or a recycling facility, travelling with them in an eco-friendly delivery truck or showing a brand new service.
Either way, ahead of an IPO, it is important to have positive reference pieces online, as page one of Google will be the starting point for many potential investors trying to find information on the company.
The beauty of digital media is that, with a targeted strategy, it can bring a company’s story to life, whether through infographics, animations, a short executive interview or self-publishing an opinion article on the corporate website or across a company Twitter or Linkedin page.
Self-publishing can be a powerful way to control and land key messages with different audiences that the media may not pick up on, such as corporate responsibility.
Employees can be a firm’s biggest advocates and are fundamental to its reputation. But an IPO can be an unsettling period for them. When media speculation starts or a formal process is announced, the first thought of employees is often ‘what does this mean for me or my job’.
Once formal IPO announcements are made externally, companies should communicate with employees – and keep regularly updating and reinforcing messages. This can be via a mix of ‘town hall’ gatherings, briefings for leaders to help them deal with their own teams’ questions, conference calls, emails and intranet publishing and poster campaigns, with digital content needing to be easily readable and accessible on mobile devices.
When delivered successfully, IPOs are key moments in a company’s history that can transform its fortunes and mark the start of life as a listed company. But executives who ignore reputational assets can be guilty of underselling their IPO or exposing themselves to criticism in an unforgiving digital world where negative articles or Tweets can whizz from New York to New Delhi in the blink of an eye.