- Richard M. Williams
Challenge: Making the Transition from Private to Public
For the first time in several years, the market environment has once again become favorable for technology companies to make the transition from private to public. Once the internal decision has been made, and key business milestones have been achieved, the company must consider the impact this transition will have on how the company is perceived and how its communication needs will change. Several key factors to understand are:
How does the company articulate its value to a broader, less informed group of investors over time;
What external market factors will impact how the company’s offering is perceived;
What are the rules in terms of when, what and how the company communicates (i.e. Fair Disclosure); and
Timing of when, where and how to communicate.
Understanding how these four factors will impact and create opportunity for a company is critical to successfully communicating the company’s messaging during the transition. Connect2 Communications recently took Acme Packet through the process, enabling them to effectively communicate the right message, at the right time to the right audiences.
One Voice – Preparing to Communicate:
Ideally, the company and its employees understand how its customers, partners and vendors view its market opportunity. What might be less understood is how the industry influencers – media, financial and industry analysts, bloggers and pundits – view its long-term prospects as a public company. Key to communicating to these audiences consistently is what Connect2 Communications calls a Messaging Playbook.
A company’s Messaging Playbook outlines how the company speaks about itself, its customers, partners, vendors, competitors, products and technology to ensure that all communication to external audiences is on the same page.
To draft Acme Packet’s Messaging Playbook, Connect2 Communications leveraged the company’s clear customer, technology and leadership strengths to create messaging about market conditions, the company’s goals and objectives, competitors and long-term prospects. The end result presented a thorough guide to how frequently asked questions about the company and its market should be answered.
Media Training is also key for executives that are making this transition. The types of questions asked of a public company are markedly different from those asked of a private company. The issues relevant to financial and business press often have little to do with core technologies and more about financial metrics, customer traction, competitors and risk. Knowing how to communicate, and more importantly how to transition when difficult questions are asked, is key to successful media interactions.
Connect2 Communications hosted a full-day media training session prior to, and again after, with Acme Packet’s key executives to ensure they were well prepared to communicate during and after the IPO.
The Market – Opportunity and Risk:
Connect2 Communications took Acme Packet (APKT) through an initial public offering (IPO) in the fall of 2006. The market factors played into how the company approached its communication strategy - the company’s IPO was the first for a telecommunications equipment vendor in six years and it was set to follow the disappointing debut of Vonage’s public offering earlier in the year. The company was determined to use these market factors to its advantage as the company began to communicate its intent to enter the public markets.
Acme Packet successfully transitioned any question about Vonage’s IPO with an answer about “the fundamentals of business” – an area where Acme Packet’s credentials were impeccable. This allowed Acme Packet to discuss key strengths about its business without having to comment on the particulars of Vonage’s business. Acme Packet leveraged its status as the first telecom equipment vendor to highlight revenue strength, customer breadth and depth and technology leadership.
The Ins and Outs of Fair Disclosure
Fair Disclosure is a Securities and Exchange Commission (SEC) rule that is meant to ensure that no one group has an unfair advantage in terms of trading on an individual company’s stock. The rule covers all forms of communications – speaking opportunities, blogs, individual conversations, emails and more – and presents several remedies if someone inadvertently discloses material information to a limited group. Material information is information that once disclosed could positively or adversely affect the value of a company’s stock – a big customer win, executive changes, SEC investigations, significant partnerships, etc. – and needs to be disclosed through proper mechanisms. The announcements of a new product, or enhancements to an existing product, most likely do not fall into the material category.
A press release is the primary mechanism to fairly disclose material information to a wide range of people and is included as one of the remedies. The media are exempt from Fair Disclosure rules as they are considered a mechanism to fairly disclose information to a wide enough group of investors and potential investors so that no one group has information that provides an unfair investing advantage; however, it would be considered reckless to rely solely on this outlet to meet requirements. It is important to note that analysts are not excluded in this ruling and therefore cannot be pre-briefed on news without the risk of violating Fair Disclosure rules. Consistency is crucial in how the company communicates to ensure it complies with Fair Disclosure requirements as mandated by the SEC as it prepares to be, and once it is a publicly traded company.
It’s also important to establish a communications strategy prior to the decision to make the transition from public to private so a company can establish a standard “business as usual” communication practice. During a company’s quiet period (from S-1 to IPO, six weeks prior to end of quarter, etc.) the company is allowed to issue press releases and conduct media interviews that are considered business as usual. If the company has established a pattern of disclosing details about customers wins, it can continue to do so during the quiet period as long as the company avoids discussing the impact on earnings.
Timing is Everything!
No company can successfully transition from private to public in a vacuum. It is important to ensure the media properly understands a company’s decision to go public and can put it in the proper context relative to the market, its long-term prospects and impact on competitors. In advance of the offering itself, a company should work to establish early relationships with key members of the financial and business press. Ideally, you want to create the impression of your company as “one to watch.” The first step is to create a press list of the editors that cover public companies in your market, as well as the editors and outlets that report on public offerings.
For Acme Packet, Connect2 Communications set up a series of “meet and greet” interviews with key editors in New York and San Francisco that it thought were important to developing long-term relationships for the client. Connect2 also identified five key market trends and/or issues currently covered by key business and technology press and developed an aggressive Point of View (POV) program to insert Acme Packet into these stories. The idea was to demonstrate the company understands key market issues and articulate the breadth and depth of its relationships with its customers’ concerns. These opportunities enabled the company to talk about how its technology was widely applicable to issues of security, authentication, trust, peering and other issues surrounding service provider plans for VoIP and other IP services.
Once relationships were established, and the company had successfully transitioned from private to public, Connect2 scheduled follow-up briefings to discuss the company’s plans with the goal of cementing Acme Packet as a regular commentator on market issues, as well as set the seeds for larger company profiles when the timing was right.
The results of the campaign were overwhelmingly positive. The company’s IPO was well received by the financial and business press and key executives stayed on message about the company, market and competitive landscape. Most importantly, the company communicated the same message to all of its audiences, speaking with one voice to investors, press, analysts and industry influencers. The market, and the press and analysts that told Acme Packet’s story, understood the company’s reasons for its IPO, the company’s contributions to the market overall, and the value it was creating for its customers, partners and investors. The company also set the stage for an active and productive dialog with leading business and financial press communities. This ongoing communication easily slips Acme Packet into the role of an industry commentator on market issues, trends and concerns and positions the company as a valued resource to leading journalists as the market for IP communication services evolve.