In 2007, I was handling corporate communications and investor relations for a small pharmaceutical company that was about to embark on a remarkable financing journey amidst a global financial crisis. In May, we filed an S-1 Registration Statement for an initial public offering (IPO) of the company’s stock and, for various reasons, didn't price the deal immediately. If any of us thought we’d take the company public in the coming months, what occurred was something quite different.
We couldn’t have known at the time that we filed our intent to go public on the eve of the 2007 subprime mortgage collapse that would trigger the 2008 financial crisis. Considered by many to be the worst financial crisis since the Great Depression, it felled some of the largest banks on Wall Street, crippling the economy and crushing Main Street investors. What followed were massive bail-outs and a global economic downturn—the Great Recession.
When Lehman Brothers collapsed on September 15, 2008, my company, Cumberland Pharmaceuticals, was more than a year into its IPO registration. It would be nearly another year before we would commence our road show and price the deal. While many IPO registrants at the time pulled their filings to pursue other options or come back another day, we persisted, remaining in registration for more than two years and filing 21 amendments along the way. (This was a record, we were told.)
As you might imagine, an IPO is a lot of work and involves teams of people from the listing company, underwriting banks (we had four), company counsel, underwriter counsel, auditors, financial printers and more. Then there are potential new investors, existing shareholders, the Securities and Exchange Commission, the media and the general public. I’d been on the retail brokerage side of the financial world from my days at Morgan Stanley, but nothing prepared me for the dance that was keeping all these highly “invested” people informed of our progress and plans in the face of such uncertainty. With heightened financial regulation and what seemed to be a never-ending “quiet period”—in addition to stringent pharma regulation and a pending FDA approval—we were being asked to say everything and required to disclose many things, but forbidden to say much of anything at all. While this was certainly a team effort, as internal point person I was often the first call. Communicating well with so many audiences under these conditions was, to say the least, a terrific challenge.
We eventually priced the deal in August 2009, and I would help run communications and investor relations (IR) for the newly public company over the next couple of years. Post-IPO life had its own set of new challenges, but for me nothing had before or has since compared to the pressure cooker that was those two years in registration. It also was one of the best times in my professional life and work of which I’m extremely proud to have been a part.
What I learned during that time is too much to tell. But I can say that, in working with Cumberland and now other clients, I have decided investor relations is very much an art. It takes a combination of technical skill and certain sensibilities to weave an investment story that is both compliant and compelling for the long term. In the face of constant pressure to tell all, companies must find the right balance between appeasing and attracting investors/analysts while negotiating with attorneys who might prefer you say nothing and keeping competitive intelligence under wraps. It’s knowing how much to give, and when, and sustaining that balance over time. It’s using the same information to paint the right blend of colors for the right audience. It’s the subtlety and strategic movement of a dance.
Whether an IPO, private funding round, merger, sale or acquisition, all strategic financial transactions create their own delicate and often intense versions of this dance. IR is rigid and nuanced, technical and creative. It requires highly thoughtful communication and laser-focused consideration of the audience, the message, the value proposition, the timing and more. The success of an IR program depends on many things, but creating an artful balance between nuanced and technical elements can help build and maintain relationships—meeting needs of existing investors while helping to attract new ones.
I call this a love story for two reasons. First, because I find myself charmed by the art of investor relations and people who excel at it. Second, because I’ll always have great affection for those who sat around the war room table for days during that first filing…and who became friends during those two years. Here’s hoping your deal doesn’t take quite that long. If it does, I’d love to hear your story.