Let the road shows begin. In a key first step, the ride-sharing company Lyft recently filed paperwork seeking to raise $2 billion, setting up presentations with investors in advance of one of the hottest IPOs of the year.
That’s saying a lot. Experts say 2019 could easily be a record year for initial public offerings, with names like Uber, WeWork, and Slack among those that may line themselves up on Wall Street. Only, according to Richard Marshall, global managing director of the Corporate Affairs and Investor Relations practice with Korn Ferry, the communications end of this high-stakes fund-raising is shifting in a way that’s critical for nearly all these firms.
Only a few years ago, investors focused on one thing: the potential return on investment. Now, in the age of the purpose movement, gender diversity issues, and other factors, communication and investor relations experts are realizing their firms need to tell a much broader story. “Numbers are only part of the story now,” says Marshall. “In today’s market, investors scrutinize a wider range of things like culture, diversity and inclusion, and environmental and social sustainability.”
What’s more, experts say, market volatility has picked up again; witness what happened to the Dow Jones Industrial Average last December. Investor patience and sentiment, never very reliable, appears to be getting shorter in a way that may affect IPOs. That creates whiplash for firms going public, and requires more agility from their communications teams.
For its part, Lyft’s offering will mark the first major test of market conditions and investor appetite; the company has priced its shares between $62 and $68, giving it a valuation of around $23 billion. If the mood on Wall Street stays upbeat, more than 150 companies will launch IPOs this year, and by some estimates in all could raise the staggering sum of $100 billion—practically the gross national product of New Zealand.
All of which, Marshall says, raises the stakes and pressure for these firms’ communications and investor relations departments to get as much buy-in as possible from an investor community that has become more critical of deals. “You need to have a more thoughtful communications strategy,” says Marshall, noting that going public is only the first step in building an all-too-critical relationship with investors and analysts. One way to accomplish that is to break down the walls that have historically separated corporate communications and investor relations, and unite the two functions to help create a synchronized business and brand messaging strategy.
The story an organization tells analysts, consumers, employees, and investors can directly impact the success of its IPO and the future of the company, Marshall says. Organizations that can tell a story that combines strong financial insight with what’s unique about its culture, talent strategy, and purpose could have a competitive advantage in an IPO.
To be sure, Lyft believes that its culture is so integral to its success that, in the IPO filing, the company explicitly listed the potential of losing it as a risk factor in becoming a public company. More pointedly, it stated, “We believe that our company culture, which promotes authenticity, empathy, and support for others, has been critical to our success.… If we cannot maintain this culture as we grow, our business could be harmed.”