Good Riddance to the Traditional IPO Roadshow
The coronavirus eliminated the lengthy, expensive boondoggle — and it turns out, that’s a very good thing
--
Over the past decade, technology has transformed the financial services sector. Everyday banking interactions have shifted from the teller to the mobile app. More and more data is stored and applications are run in the cloud. Software has automated myriad processes, internal and external. Yet through it all, the IPO roadshow has remained unchanged since before the dot-com era.
In any given year, about 100–200 companies will go public in the United States. Each company will endure a similar roadshow process, with the management team crisscrossing the country for eight to nine days to meet with equity investors and build demand for their IPO. Each day, the team will meet one-on-one with four to eight investment funds, depending mostly on how bad the traffic is and the time of the flight to the next city. For lunch, the team will present to a ballroom full of investors as a way to expand the marketing process to a broader group. All told, the company will meet with roughly 40 investors in a one-on-one format and a few hundred investors total through group calls and luncheons.
Why? Finance is a relationship industry, and in the old normal, in-person meetings were key to building relationships. How many times have you heard “I need to look management in the eye before committing capital” or “You can’t seal a deal without a handshake.” Having been a banker for 15 years, I know the real truth, which is “How else am I going to get Global Services status on United?” And for decades, CEOs and CFOs have embarked on this rite of passage for the honor of becoming a public company because bankers told them “This is how it’s always been done.”
Then, Covid-19 hit. The global economy came to a screeching halt. Air travel declined by 90%. And Zoom use skyrocketed as companies, schools, families, and everyone else were forced to adapt to a no-contact…
