The Un-stealthing Process for Early-Stage Private Companies

For early-stage private healthcare companies, the process of un-stealthing is thematically similar to the process of becoming a publicly traded company; namely, the company has to prepare for increased scrutiny from external parties. Therefore, when making the decision to un-stealth, when and how to do so should be decided in the context of several important considerations. 

Considerations

First, is your company ready to share its clinical and regulatory progress? The public eye, particularly investors, will be acutely focused on the current profile of the company and the progress they expect to make. Of course, early-stage private companies are not always ready to share granular timelines for clinical and regulatory milestones. For this reason, it is critical to develop a refined messaging strategy that remains sensitive to the inherent uncertainties of early-stage companies while simultaneously building the foundation for credible disclosure.

Second, does the company have the team in place to manage external communications? Most early-stage companies are laser focused on internal development, and rightfully so. However, the un-stealthing process will invite regular engagement with media, banking partners, and interested investors. While aligning on messaging is important, it is even more important to have the people in place to deliver the message effectively. 

And lastly, does the timing of your un-stealthing offer strategic value to your company? In other words, how does increased disclosure support future business development or financing goals? Timelines for a financing will often be set against the backdrop of positive news flow and encouraging macroeconomic conditions. Un-stealthing can provide further support toward a financing event, given later financing rounds often require a broader audience from the financial community. For this reason, it is important to align the two activities properly. This is arguably the most important consideration, addressing the “why” behind the decision to un-stealth.  

Preparation 

Once these considerations are carefully examined, the next step is a detailed preparation of strategy and materials as the company opens its doors to the public. 

Preparation starts with proper messaging. Communicating the value proposition of your company and laying out the milestones you expect to achieve requires careful consideration of the competitive landscape and an accurate projection of how ongoing activities will develop. The goal should be to lay out messaging that conveys excitement about what you bring to the market, without placing company representatives in a difficult position if developments do not go as planned. 

Subsequent materials should flow through from these key points to ensure consistency in communications to external parties. The materials key to engaging the financial community include the company’s corporate deck, website, and press releases, to name a few. An emphasis should be placed on clear and concise materials that engage investors and leave lasting impressions.

Finally, companies should plan out a comprehensive calendar of events and activities. Investor conferences, trade shows, and IR planned events are excellent venues for conveying the company message and engaging with those essential to the future development of the company.  A specific event may be leveraged to serve as the company’s debut, allowing the company to control their narrative from the very beginning. A target audience and a financing strategy should inform when to engage and what events to partake in. 

Gilmartin Group partners with many healthcare innovators, both public and private, to build nuanced communications strategies, developing sustainable messaging that sets companies up to build credibility over time while clearly conveying the differentiated value they provide. We partner with leading public relations and graphics firms to help companies build a website and corporate deck that reflects their objectives in a clear and concise manner. And most importantly, we act as a strategic advisor in contemplating the decision to un-stealth. Contact us today.

Noah Corin, Analyst

Virtual Marketing Learnings

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The global COVID-19 pandemic is changing the way things are done across society. How companies market themselves to Wall Street is taking a new form as well. Investment banks, like medical and trade organizations, are utilizing online platforms to power virtual events to keep clients and members connected during these trying times. Now, with six months of experience helping facilitate corporate presentations and investor meetings through a variety of virtual forums including conferences, non-deal roadshows and IPO roadshows, we have learned how to optimize the experience to generate nearly the same value these events were designed to deliver in person.

  1. Video > Audio – The video calls certainly took getting used to, and now it appears they are here to stay. We have found that they increase engagement and interaction, especially in the presentation or fireside chat setting at conferences and investor days. At this point, video has gone from “optional” to “strongly recommended” by banks because it is generally believed to be more interesting and captivating.
  2. Video Conferencing Platforms – There are many software solutions for video conferencing and presenting available now – Zoom, Teams, BlueJeans, Issuer Direct, Open Exchange and the list goes on. Because we are using so many different platforms, it is important to understand this presents another logistical hurdle that needs to be addressed by taking time to learn and use them properly. It is always important to test these platforms with your computer, microphone and camera to avoid any delays or coming off as unorganized or unprofessional in meetings and presentations. Without a consensus choice platform for presentations, we need to be sure to always take advantage of any speaker ready or dry runs configuration checks offered by event hosts. If you plan to use a presentation, make sure you can share your screen and are familiar with the projection software.
  3. Participation – Removing the burden of travel makes events more accessible to both companies and investors. This increased participation has been demonstrated over the past six months. It is now easier for companies and investors to participate in multiple days of a conference. Another factor contributing to increased company participation is the expanded communication from companies regarding updates around COVID, as well as strategic responses serving as pertinent discussion points. This is a top concern of investors trying to get a handle on the current environment and future trends.
  4. Schedule – With the aforementioned increased participation rates, creating efficient schedules that balance interactions between top holders, potential investors and larger funds without repeating too often becomes more challenging. Banks do not have visibility into companies’ schedules at other conferences, and the fact that investors are not guaranteed meetings with companies makes it challenging for them to manage their individual schedules and requests at different conferences. We continue to play an active role here to ensure top holders can have appropriate access, while accommodating new investor requests and being mindful that repeated meetings without news from a company will not be the most productive. We collaborate with the banks to help ensure schedules are optimized for companies and investors. Another layer of logistics is created by participating companies and investors in different time zones. West Coast companies probably do not want to present at 8am EST. On the other hand, East Coast investors probably do not want to have their last meeting at 4pm PST. Lastly, different management teams have different preferences around breaks; who really wants to be in back-to-back meetings without scheduled breaks for eight hours?
  5. Targeting – When companies are participating in virtual non-deal roadshows hosted by banks, investor targeting becomes less geographically focused as there are no longer physical constraints dictating companies’ ability to meet with certain investors on a specific day. This has created opportunities to meet with investors in less concentrated regions like Seattle, Portland, Atlanta and Charlotte. It also means it is more important for IR teams to collaborate with corporate access teams so that if multiple events are being coordinated, banks can avoid duplicating targeting efforts in certain regions.
  6. IPO Roadshows – Finally, as a result of the ease and increased accessibility afforded by virtual meetings, IPO roadshows have been condensed to around four action packed days of video meetings. Banks are seeing added value to this model beyond the previous “fly back and forth across the country for two weeks” approach. Part of the reason roadshows have been condensed is because an increased number of test-the-water meetings can be conveniently conducted before the IPO process officially kicks off. Investors have gotten comfortable with this model so companies with an IPO in their future should expect this to be the norm for the time being and beyond.

This new investor meeting landscape is filled with nuance and its own logistical hurdles. We hope this helps you prepare for your next event and would be happy to discuss optimizing your approach. Contact our team today.

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Philip Taylor, Vice President

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S-1 Business Section Drafting 101

Pre-Org Meeting IPO Prep: S-1 Drafting
The S-1 is comprised of business and financial information designed to inform prospective investors and outline all material business risks. It offers an in-depth, first look at a private company, and analysts and portfolio managers often comb through the public document carefully when considering an investment.

General S-1 Drafting & Filing Execution Timeline:

Business Section Overview
Generally, the business section is where you will have the most latitude to tell your story and make the case to prospective investors regarding why they should make an investment in the IPO. It’s important to remember that the S-1 serves two purposes: to market your IPO and to disclose risks and satisfy other legal requirements. As a management team, you should generally focus on including what you’d like to say. Leave it to your underwriter and legal teams to guide you in satiating legal requirements and mitigating risk. As a reminder, everything included in your roadshow deck must be included in the S-1, and every data point included in both must be well-sourced and factually supported.

Outline/Structure
In terms of content, most S-1 business sections will follow the same general outline, with some nuance depending on management’s preference and investment thesis specifics. It’s also worth noting that much of the business section will be repetitive by nature.

The time it takes to turn an outline into a more thoughtful draft will vary, but the iterative process typically takes about 1-2 months prior to the Org Meeting and another month or two following the Org Meeting. Leveraging your IR partners to coordinate the drafting process and “manage the master” can significantly mitigate the burden on your internal team.

Illustrative Guidelines for the Flow and Structure:

1. Overview – “The Box”

  1. Goal: This section is a comprehensive yet high-level overview of the entire business section where companies make their strongest case, in their own voice, on the attractiveness of the offering.
  2. Length: 4-6 paragraphs
  3. Topics:
    • Mission/vision
    • Brief product overview
    • Market highlights/opportunity
    • Growth/progress to date

2. Competitive Strengths

  1. Goal: This is effectively a more thorough version of the investment thesis slide found in the beginning of roadshow decks where the company highlights the most compelling components of the offering.
  2. Length: 4-6 bulleted (short) paragraphs, each formatted with a bolded highlight plus additional support copy
  3. Potential Topics:
    • Technology
    • Clinical validation
    • Payor value
    • Established reimbursement
    • IP
    • Management team

3. Growth Strategy

  1. Goal: This is effectively a summary of the drivers behind your success (answering the question why/how are we going to be successful?); may also include your commercial strategy, pipeline and short term/long term growth drivers
  2. Length: 4-6 bulleted (short) paragraphs, each formatted with a bolded highlight plus additional support copy
  3. Potential Topics:
    • Strength of product
    • Initial strategy
    • Mid-term commercial strategy
    • Longer term commercial and growth strategy
    • Pipeline
    • Market expansion

4. Market Opportunity

  1. Goal: To convey the size and scope of the addressable market(s) and how management is approaching it. How you discuss the opportunity should align with the commercial strategy.
  2. Length: Variable – typically 3-6 pages
  3. Topics:
    • Unmet needs
      • Existing alternatives/competition
      • Limitations
    • Addressable market
      • Disease overview(s)
      • Market segments
      • TAM ($) – Theoretical vs Attainable

5. Product(s) Overview/Our Solution

  1. Goal: To demonstrate that you have the solution to address the unmet needs outlined previously and take share aggressively.
  2. Length: 3-6 pages, including images/graphics
  3. Topics:
    • Procedure/technology overview
    • Mechanism of Action (MoA)
    • Advantages
      • Patient
      • Provider
      • Payor

6. Clinical Data

  1. Goal: To provide a succinct and compelling overview of clinical data demonstrating the safety and efficacy of the product/solution.
  2. Length: 3-5 pages
  3. Topics:
    • Overview
    • Trial results
      • Explanation of endpoints
      • Data tables
      • Comparative data sets

7. Reimbursement

  1. Goal: To demonstrate the current and expected status of reimbursement for the product/solution.
  2. Length: 2-6 paragraphs depending on level of nuance
  3. Topics:
    • Covered lives
    • Coding
    • Payment
    • Go forward strategy

8. Commercial/Growth Strategy (placement is variable, sometimes earlier)

  1. Goal: To convey what you’re doing to capitalize on market now and in the future. Consider modelling implications for how you outline your strategy.
  2. Length: 2-5 pages
  3. Topics:
    • Sales and marketing strategy
    • Salesforce expansion
    • Clinical pipeline
    • Product pipeline

9. Intellectual Property

  1. Goal: To explicitly state details relative to IP portfolio.
  2. Length: 2-4 paragraphs
  3. Topics:
    • Patents by geography
    • Issues/pending

10. Manufacturing & R&D

  1. Goal: To provide details around current and expected manufacturing strategy. To convey focus on specific product development.
  2. Length: 1-2 page
  3. Topics:
    • Facilities
    • Contract manufacturer relationships
    • Quality management
    • Supply chain

11. Government Regulation

  1. Goal: Provide boilerplate type details to satisfy disclosure requirements.
  2. Length: 1-2 pages
  3. Topics:
    • FDA approval process/timeline
    • Continuing regulation
    • OUS regulatory authorities
    • HIPAA, CMS, private payers, etc.
    • Other relevant regulations

12. Additional Details

  1. Goal: To explicitly state factual details.
  2. Length: 1 paragraph per topi
  3. Topics:
    • Employees
    • Facilities
    • Legal proceedings/ongoing litigation

Post Org Meeting Expectations
After your org meeting, your bookrunners will typically manage the remainder of the S-1 drafting process, scheduling a number of calls each week for the month or two following your org meeting–with the goal to complete and confidentially file the S-1 around 3-4 months prior to anticipated IPO pricing.

The SEC will typically provide comments to the confidentially filed Form S-1 in approximately 30 days. Corporate and underwriter counsel will work to address any issues and will coordinate with management and bankers to respond and amend the S-1 accordingly. This process continues until the SEC approves the S-1, typically after 1 to 2 rounds of comments, at which point the filing can “flip” to public and the IPO roadshow can commence. Typically, S-1s flip public 2-3 weeks prior to the roadshow.

Conclusion
In all, coming to your Org Meeting with a thoughtful first draft of the S-1 business section is time effective and allows your team to focus on other more pressing matters through the early stages of the IPO prep timeline. For more information on S-1 drafting or to learn more about Gilmartin and how we strategically partner with our clients, contact our team today.

Brian Johnston, Vice President

5 Things To Include In An IR Presentation

All companies, both public and private, will inevitably have to present their organization to investors. Though not every presentation is identical, there are some common topics that must be touched upon in every slide deck. Having worked on countless investor presentations for our clients, we have compiled a short list of what we believe should be included in a typical 15-25 slide investor deck.

1. The Problem You Are Solving
All successful products solve a problem, no matter how big or small. Given the nature of your business, not all investors will be fully aware of the benefits that your product provides. It is imperative that you include a detailed explanation of how your product works and demonstrate why it is a better solution than that of your competitors. This will allow investors to recognize what differentiates you from your competition and what makes your company the best positioned for the future.

2. Market Opportunity
In order for investors to understand the true potential of your business, they must be made aware of how much the company can grow. All presentations should include the market size of your industry and how far you can penetrate that market. Investors can use this to estimate your future revenues and compare you to other companies within the same sector.

3. Commercial Strategy
Once you have communicated the two previous topics to investors, it is time to reveal how you plan on achieving your goals. This does not need to be too granular and can be kept quite general. Oftentimes, companies provide short-term and long-term goals to help investors understand your priorities and what they can expect to see in the future. Your business plan demonstrates to investors that you have set clear and attainable goals and have a logical strategy for success.

4. Recent Milestones
Not only are investors looking at your future potential, they are also interested in your past performance. Include a slide dedicated to recent achievements to give investors a glimpse into the pace at which your company grows and attains its goals. This paired with your commercial strategy allows investors to gauge how effective and efficient the management team can be.

5. Financials
Finally, all presentations should have a slide dedicated to the company’s financial position. Some companies elect to include their most recent income statement while others choose to include only a few metrics. Though the degree of detail that companies provide varies, the metric that should always be included is revenue. Revenue is the most important indicator for investors, as it allows them to gauge your ability to make money. Typically, the latest quarterly results are disclosed along with the revenue from the year prior.

It is important to keep your presentation up to date, as you want to show investors the most accurate picture of your company. If you have any questions or would like to know more about what to include in an investor deck, please contact Gilmartin Group today.

Malcolm MacLeod, Analyst

What Makes an IR Website Best-In-Class?

Any company looking to attract market attention today should not underestimate the importance of a sophisticated corporate website with a high-quality investor relations section. We often tell clients that while a great website doesn’t make your company high-quality, all high-quality companies have great websites. Your website is often the very first place potential investors will look to learn information about your company, so put your best foot forward by making your IR website appealing and its pages informative and easy to navigate.

The most powerful investor relations websites are the ones that successfully tell your investment story by providing investors with compelling and informative context that ultimately influences their decision to invest. While providing the basics–press releases, financial data and reports, investor events–is important, what separates the truly exemplary sites from the mediocre is a focus on providing context on the company’s strategy and clarity, as well as execution and vision.

Over the years, we have seen some great IR websites—as well as some not-so-great ones. Here are several best practices to keep in mind when developing a best-in-class IR website.

Navigation & Ease of Use
Nowadays, so much of our time is spent on the internet and we are accustomed to quickly navigating to desired information. This means that website user experience is more important than ever. Before potential investors read the information on your website, they will need to navigate to the appropriate section for your corporate homepage. So, first and foremost, make your IR section easy to find. Otherwise, you could leave potential investors frustrated and—even worse—with a negative first impression of your company.

The menu should be intuitive and easy to maneuver. An IR website should drive a compelling narrative that will resonate with the investor and hold their attention. The best websites are ones that seamlessly move users through its flow—investors should be able to move through your IR website so that they leave knowing the essential elements of your brand story, objectives, and vision.

Design
Most public companies have their IR site hosted by a third-party vendor with templates that automatically pull filing information, stock performance, and press releases. Because IR sites are often hosted separately, it is important to ensure that the design of your IR site mirrors the branding of your corporate website. Offering a simple design and a coherent story about the company is better than drowning users in incomprehensible data.

Mobile Access
It is no surprise that we consume more information on our mobile devices and tablets than our desktop computers. This means it is critical to consider how information is conveyed on these mediums. Additionally, different elements of your IR website should be prioritized differently on mobile versus desktop. For instance, you may prioritize events on your mobile site over reports, since you know based on website analytics that your users view your calendar on mobile, but they aren’t so keen to view a PDF. As with the desktop view, your main goal is to ensure your investors walk away knowing more about your company, so it’s essential to know what types of information your audience is gravitating towards on each device.

Content
As your primary storytelling vehicle, investor relations websites are most effective when investors are able to consume content in ways that are intuitive, multi-channel, visual, and meaningful. The key components of a successful IR site include:

  • Investment thesis
  • Press releases & financial news
  • Regulatory filings & financial data
  • IR event calendar
  • Stock quote/chart
  • ESG

Your company information and strategy sections make up the narrative of your corporate story. Potential investors look to this content to gain a sense of your company’s strategy, values, goals, and accomplishments. You want to ensure these areas showcase your company brand and story with compelling text and visual elements. The key is to keep your story engaging and concise so that your investors can get a sense of who you are at a quick glance.

Access to Financial Data
While compliance requires the inclusion of regulatory filings and some governance information, providing access to financial information is more than just about remaining compliant. Your financial information provides investors with vital context that will help them make decisions about investing in your company. The following are best practices that serve to tell your past and present corporate story while enhancing communication with investors:

  • Archived financial reports
  • SEC filings (U.S.) / SEDAR (Canada) / Regulatory News (Europe)
  • Online annual reports

In addition, many companies will package information on quarterly results, including earnings press releases, prepared remarks, 10-Q, conference call replays and supplementary information for easy access.

Environmental, Social, Governance (ESG)
For those unfamiliar, Environmental, Social and Governance, or ESG, refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. (For more information on the basics of  ESG, take a look at our two-part blog series—part 1 and part 2.)

Many investors believe these criteria can help to better determine the future financial performance of companies, and, as such, ESG is increasingly becoming an important investment consideration for institutional investors. Like other elements of your corporate story, ESG demonstrates your company’s core values, goals, and position within your market—all elements that investors consider when assessing your company’s future revenue potential. Your IR site is a great place to package information on the practices and policies your company has related to ESG in order to make them easy to find for interested investors.

For more information…
Over the years, our team has developed hundreds of IR websites for every type of company in healthcare. Contact us to learn how we can help guide you in developing and executing an effective IR site to best support your investor relations program.

Carrie Mendivil, Principal

Virtual Annual Meetings

Annual meetings are a regulatory requirement for most public and private companies. While many retail investors may think a company’s annual shareholder meeting is like the extravaganza put together by Berkshire Hathaway, typical annual meetings are administrative and follow a specific format. Investors who own shares in a public company will receive a notification about that company’s annual meeting. This notification will include the meeting’s agenda, the election of the company’s board of directors, selection of independent registered public accounting firm, and the ability to vote on any proposals that are put before the board, either by shareholders or company management. These meetings also allow shareholders to ask questions to representatives of the company. Unlike Berkshire Hathaway’s five-hour question and answer session with Warren Buffet and Charlie Munger, most annual meetings last no longer than an hour.

Over the past several years, some small- and mid-size companies have made the switch to virtual annual meetings from physically-hosted annual meetings. While this trend was starting to gain momentum, we believe the COVID-19 pandemic will drive most companies to host virtual annual meetings in 2020.

Below are some of the top reasons why virtual annual meetings may be right for your company:

  • Logistics and cost. Physically-hosted annual meetings are usually scheduled during working hours and held in large conference rooms in hotels or meeting centers. Listed below are just some of the staffing and material requirements needed to host an in-person annual meeting.
    • Staff, typically company employees
    • Computer with an internet connection
    • Reliable audio and video capabilities
    • Hard copies of shareholder materials, e.g., current SEC financial documents and proxy statements
    • Refreshments

Virtual annual meetings do not have these requirements, as corporate management will make their presentations and answer shareholder questions via a teleconference or webcast, saving both time and money in the process.

  • Scalability. A virtual annual meeting can be infinitely scalable. If more shareholders than expected participate in a virtual annual meeting, the telecommunications provider can easily add more lines to accommodate as many shareholders as possible, which compares favorably to cramming more chairs into a crowded hotel conference room.
  • Limitless location. Management and shareholders can present and attend a virtual annual meeting from anywhere, as long as there is a good telecommunications connection.
  • Increased shareholder turnout. Annual meetings are typically scheduled during the workweek, which can limit the number of attending shareholders. With a virtual annual meeting, shareholders can simply log in to the meeting without having to travel to a specific location.
  • Multiple vendors. With the rise in popularity of virtual annual meetings, the number of quality vendors has also increased. Transfer agents, proxy solicitors, earnings call hosts, and webcasters have all recently begun to offer virtual annual meeting services.
  • Real-time voting. Most virtual annual meeting vendors also offer real-time, live-meeting voting. This service typically includes tabulation and inspectors of election services.

Over the past several years, virtual annual meetings have become more popular with small- and mid-size companies, as this switch from a physical annual meeting can save time and money. In the wake of the COVID-19 pandemic, we believe companies of all sizes will shift to a virtual annual meeting in 2020. Due to the reasons we pointed out, we feel the adoption of virtual annual meetings will continue to become more popular as companies of all sizes begin to embrace them.

If you would like to discuss how your company can transition from physical to virtual annual meetings, contact our team today.

Greg Chodaczek, Managing Director

Considerations for Visual Content in Investor Presentations

It goes without saying that a compelling investor presentation deck can be a resourceful tool for providing a company’s value proposition. The visual content of the deck, in particular, plays an impactful role in the process of delivering this messaging. As Scott Berinato, a Senior Editor at Harvard Business Review, previously indicated, “A good visualization can communicate the nature and potential impact of information and ideas more powerfully than any other form of communication.”

Content should be essentially focused on messaging in a simple and concise way, without extraneous material, to avoid overloading sensory processing that could lead to incorrect understanding. According to Richard Mayer’s research on multimedia learning, information processing is in part based on the assumption of limited capacity, which suggests that we have a limit on the amount of information that can be processed at one time. In considering this assumption, along with other cognitive principles, researchers from Stanford, the University of Amsterdam and Harvard found that many presentations could benefit from these psychological foundations.[1] The following is a snapshot of this research, including certain cognitive principles to consider in reviewing slide content, such as limited capacity, discriminability, perceptual organization and compatibility.

Limited Capacity

Beginning with limited capacity, our working memory can hold about four elements of information at a given time, and an overflow of information beyond four units can overwhelm processing of that information. As a result, it is good practice to avoid presenting more than four concepts in a slide. If including bullets with these main points, brevity is important, and organizational ordering of some sort can also help the audience in better retaining the information. Also, in reviewing slide content, consider questions like the following:

1) If using bullets, are there more than four introduced?

2) Is there more than one line being used for any of the bullets?

3) Is there direct labeling on concepts?

4) Is there a key being used to identify elements when they could be labeled directly?

5) Are complicated concepts organized and separated in parts?

Discriminability 

To achieve ease in distinguishing between two properties, e.g., with colors or with the font size between labels and descriptions, the contrast between the two properties should be sufficient to clearly show delineation. In reviewing slides, ask the following:

1) Is the text contrasted sufficiently from the background, e.g., black font on white space or white font on darker backgrounds?

2) Are the entries in a table large enough to be read easily?

3) Are the slide titles and logo of the company distinctly reflected from the main content of each slide?

4) Do adjacent colors have clear separation in the color spectrum?

5) Are font sizes appropriately applied and easily readable?

Perceptual Organization

The principle of perceptual organization assumes that people segregate perceivable elements into groups in some cases through proximity or similarity. To aid in this natural tendency, grouped elements can be separated by distinct lines, colors, shapes or other forms. On spacing and placement of content in slides, consider asking:

1) Are labels simply applied near the corresponding elements, and is there appropriate spacing present for labels in keys, charts, graphs, etc.?

2) If there are grouped conceptual elements, are related graphics, common colors, text and lines proportionately laid out?

3)  Are elements in the foreground and background appropriately separated?

4) Is independence achieved between different groups of concepts?

5) Are groups uniformly organized, e.g., bullets that follow an icon?

Compatibility

The properties of visual content should be consistent with the actual content for ease in interpretation and understanding. The researchers in this study pointed to the “Stroop Effect” as an example where people were found to have more difficulty naming the color of the ink used when the words were in a different colored ink from the color named (e.g., blue ink used for the word red). For compatibility within slides, consider asking the following:

1) Are the graphics, background patterns, text, etc. coordinated for compatibility?

2) Are line graphs used to describe trends and mixed bar/line displays used for interactions?

3) Is the right font used in relation to the type of presentation (i.e., modern fonts rather than traditional fonts)?

4) Are the right layouts of charts and tables used for the subject matter?

5) Is a map used for geographical representation?

Improving the visual content of an investor presentation will improve the delivery of a company’s messaging. When creating an investor presentation, be sure to consider the questions mentioned here to ensure your slides are simple and concise. For help reviewing your investor presentation and determining whether any updates are needed, please contact us today.

 

Ji-Yon Yi, Associate

[1] Kosslyn, S, Kievit, R., Russell, A., Shephard, J., 2012, ’PowerPoint presentation flaws and failures: a psychological analysis’, Frontiers in Psychology, vol. 3, no. 230.

Pros & Cons of Professionally Taping Your Roadshow

An Initial Public Offering or IPO is the process of selling new or existing securities to the public for the first time. The process of “going public” consists of many steps, culminating in the pricing and after-market stabilization by the underwriters. While every step in the process is imperative, the ability of management to “sell” a company to institutional investors is essential.

Once the SEC Form S-1 has been flipped from confidential to public, there is a mandatory 15-day waiting period before a company can begin its marketing roadshow. During this time, companies typically finalize their corporate messaging and slide decks and prepare for their investor meetings. At the beginning of the IPO roadshow schedule, the lead underwriting bank will generally have the company present to its institutional equity salesforce, at which time, the presentation will be recorded by the lead underwriting bank and uploaded to a U.S. Securities & Exchange Commission (SEC)-compliant online solution, like NetRoadshow. These services provide potential IPO investors, who may or may not be able to attend a live presentation, an opportunity to watch the recorded presentation from any internet connected device. Having the IPO roadshow professionally recorded and edited, compared to having it recorded by the underwriters, may make a difference between a good IPO and a great IPO.

Below are some of the top factors to consider when thinking about prerecording an IPO Roadshow:

  • Practice makes perfect. A strong, polished corporate presentation can be one of the deciding factors for institutional investors thinking about investing in a new company. A company that prerecords its IPO roadshow has the opportunity to practice and even view its presentation before presenting live to investors. This advantage can be invaluable, as management has a chance to observe the presentation and make any adjustments it deems necessary.
  • Multiple tries. Just like movies and television, prerecording an IPO roadshow allows for multiple retakes. If a word is flubbed or a sentence does not sound quite right, the speaker can record another version of that sentence, and it can be edited during post-production.
  • Professional editing. Unlike an IPO roadshow recorded during the underwriting sales teach-in, prerecorded IPO roadshows are professionally edited and enhanced, potentially making the presentation look and sound better.
  • Cost. As with any service, there is always an associated expense. On average, a 30-minute IPO roadshow can cost between $15,000 and $20,000 for taping and editing. The actual cost could be higher depending on the amount of time it takes for post-production.
  • Timing. Timing is typically the reason many companies decide to forego prerecording their IPO roadshows. A video production company will want at least seven days to record and edit a customized video, forcing the company to record its IPO roadshow within a few days of flipping its S-1 to public. While many companies will have their roadshow decks nearly finalized by this time, prerecording an IPO roadshow will preclude any possibility of making final changes to a presentation.

Conclusion: Having a professionally recorded and edited IPO roadshow available on the internet for potential IPO investors to view can be a deciding factor in whether they choose to invest or not. On the surface, the decision to prerecord an IPO roadshow seems like a “no-brainer,” but in reality, the choice is much more difficult. The combination of extra time needed and the inability to change any portion of a corporate slide deck, post-recording, could make prerecording an IPO roadshow a non-starter. To further assess the pros and cons of professionally taping your IPO roadshow, contact us.

Greg Chodaczek, Managing Director

Quarterly Earnings Calls: To Prerecord or Not Prerecord

The United States Securities and Exchange Commission (SEC) requires that public companies, whose securities trade on an exchange in the U.S., file quarterly and annual financial reports. According to the National Investor Relations Institute (NIRI), a U.S.-based association of corporate officers and investor relations consultants, 92% of companies represented by their members conduct quarterly earnings calls and webcasts as part of their earnings release process.

Traditionally, these conference calls and webcasts begin with management reading scripted comments about the financial results of their most recent fiscal period, followed by a question and answer (Q&A) period. This dynamic presents a scheduling nightmare for many organizations—arranging for management teams to be in the same location at the same time, or arranging the technology to make this appear to be the case, is often easier said than done. Over the years, though, technological advances have allowed conference call providers to offer a prerecording service to their clients. This enables management to prerecord their scripted comments of the conference call.

Before taking advantage of this technology, it’s important to first consider the pros and cons. Here are some factors to consider when thinking about prerecording an earnings call:

Smoother Speech

Based on the current trend, the length of a typical medtech quarterly earnings script is between 2,500-3,000 words and takes approximately 22 minutes to read. Prerecording this section of the call allows management the opportunity to eliminate any misread words or verbal stumbles, potentially making the call sound more professional.

Location Illusion

A potential issue that can be resolved via the prerecording process is the difference in speaker volumes. With the potential of “C-Suite” employees working in different office locations around the globe, having an edited prerecorded earnings script can make it sound like every speaker is in the same room.

Increased Cost

Quarterly conference calls and webcasting services can be expensive. Adding a prerecording service can increase overall costs by 20-50%.

Inflexible Schedule

Prerecording services typically require recordings to occur 48 hours prior to the actual earnings call, allowing time for editing. This requirement forces companies to have a completed and internally-approved script two days before their earnings call. Prerecording services might make exceptions to their timing requirements, but at an additional charge.

Differences between the Prerecorded Segment and Live Q&A

Sometimes technology can do too good of a job. Crystal-clear audio quality of a prerecorded portion of the call might differ drastically from that of the live Q&A. This may throw off some investors, and make them question the content.

Management Warm-up

Many of the management teams we have spoken with about prerecording believe that reading the script live during the conference call is a nice warm-up for the Q&A. Reading the script live sets the tone and gets management in the right state of mind for the second half of the earnings conference call, which is an advantage that prerecording doesn’t offer.

After considering these factors, we’d like to present a third option that’s being utilized by Amazon.com, Inc. and Tesla, Inc., which is to eliminate the scripted section of their conference calls altogether. Both companies release comprehensive earnings reports and only hold a Q&A session during their conference calls. This change in conference call practice has not yet been adopted by any medtech company, but we would not be surprised if several large cap companies implement this change in the next few years.

While the SEC requires public companies to file quarterly and annual financial reports, it’s up to the companies to decide whether to host a corresponding conference call, how it should be conducted, and what information should be included. In our opinion, it’s still the best practice to include management commentary and a Q&A session. As to whether or not to prerecord the management segment, contact us to further review your options and decide what is right for your company.

Greg Chodoczek, Managing Director