This article was originally published on Forbes.com on January 25, 2024
RACHEL KULE, PURSUIT PR
Forbes Councils Member
The business world navigated a challenging environment in 2023 with inflationary pressures rising along with geopolitical risk. The net result was more market uncertainty as the unknowns outweighed the knowns. This left companies reevaluating their fundraising strategies, including when and whether to go public.
But one fact that we can state with certainty is that communications must be clear, concise and constant, no matter which path firms take. Transparency instills investor trust and confidence in maturing privately held and publicly traded companies. This is essential.
To succeed, communicating critical information—no matter how market conditions change—remains vital. This doesn’t mean rushing to counter every news story, but time and time again companies stay silent or follow a “no news is good news” approach when they need to address significant commercial headwinds. New competition, a difficult economy or even personnel issues may make hitting financial targets more difficult.
So how does the C-suite decide on the catalysts for communicating?
What I’ve found in speaking with executives over my career is that customers and clients need to know who you are, what the company stands for and why your value proposition matters now.
Who You Are: Getting The Story Ready Before An IPO
Privately held companies eyeing an exit are more likely to achieve a successful raise when they practice proactive communication. Defining, refining and articulating a company’s story requires ample time and effort. In fact, at an October 2023 Deloitte Latham & Watkins IPO Symposium at Nasdaq, there was consensus among CFOs who recently took their companies public that telling the story took considerably more effort than expected.
Others agreed that if you are unable to clearly articulate your story, then you shouldn’t even bother trying to raise capital. Getting the story ready early was a top priority. To tell the story, companies need to not only understand the facts of the business but also demonstrate the ability to explain the fundamentals and overall value proposition to the general public.
With the IPO window currently in flux, companies are grappling with what to do next. Many appear to be getting ready for an eventual listing, while others are ready and waiting. Whether a company is priming for an IPO or embarking on a spinoff or M&A transaction, the need to get the story right and out early is critical.
What You Stand For: A Solid Grounding In Mission, Vision And Values
Establishing what a company stands for helps mitigate risk and maximize opportunity, particularly when it comes to the unknown, but that’s just the beginning. Leaders can and should communicate what challenges they are trying to solve.
Avoiding or mismanaging communication, especially in the lead-up to a public listing, or during a crisis, may result in disgruntled employees, losing ground to a negative news cycle, or a misinformation campaign. There’s even the potential for board misalignment, as we saw with the recent turmoil at OpenAI.
Ultimately, confusion leads to a weakened level of trust in and confidence about the company.
Why It Matters Now: Proactively Address Potential Stakeholder Concerns
Effective communication starts with mastering the required quarterly earnings, board meetings, and engagement with investors, analysts, media and employees. Diligent planning for each stakeholder touchpoint is even more important in the run-up to an IPO where information demands accelerate, media scrutiny intensifies and your public reputation takes further shape.
Corporate executives also need to keep in mind transformative changes in technology and how they may affect not only the bottom line but their efforts to communicate as well. The emergence of advanced AI technology has clearly captured investors’ and the general public’s imagination and will be a consideration going forward. What was noticeable about this topic is how many people were so quick to judge it, defend it or speculate about it. This is common when there is a new emerging trend.
AI will be a key part of the story as this technology in particular may significantly alter a company’s growth prospects. Firms will have to evaluate how AI may affect business operations and ways to effectively communicate a clearly articulated strategy to their stakeholders.
Some questions that will need to be addressed include:
What does the firm know about AI?
What is unknown about AI?
What are the concerns of customers, suppliers and investors?
What do employees need to learn and how interested are they?
While we do favor timely communication, it’s best to avoid chasing every new “shiny object.” A more thoughtful, grounded communication plan that incorporates when and how to address the business implications of new technology will better serve corporate leaders.
As we look ahead, we know there will be more unknowns. Sometimes there are more than others as we observed in 2023. But no matter what unfolds, proactive communication can center a company. Understanding the facts, having a curiosity of the unknown and maintaining a perspective on the possibilities are all part of taking this proactive approach—no matter what comes our way this year.