By Mike Houston, Managing Partner, Capital Markets
Lambert’s DNA was built on being “the PR firm that can read an income statement™,” since Lambert has long served as a differentiated, full-service communications provider, spanning outside the realms of traditional investor relations scope.
SPACs are only the latest capital markets entity to drop within the Lambert umbrella of expertise. In what founder Jeff Lambert will assuredly coin our SPACtrum of services, we intend to lay out some initial guidelines to SPAC-related investor relations and its associated intricacies.
“SPACs are comprising an increasingly large percentage of the U.S. IPO market, and in order to survive and thrive in the marketplace, they must be prepared to cultivate long-term relationships with investors beyond the initial deal,” said Lambert and TiiCKER CEO Jeff Lambert. “We have worked with many companies in similar scenarios, and it is important to stress the transition from transactional to strategic messaging while broadening the investor base and performing as a fully operational public company.”
The IPO process for a SPAC is unique its structure to theoretically isolate the company from volatile market dynamics. This structure is composed of four phases – the initial IPO and raise of capital, the identification of a target and transaction announcement, the close of the reverse merger, and the de-spacing process. While the initial phase encounters less hurdles than a traditional IPO process, the latter phases can provoke more hurdles when transitioning into an operating public entity.
Let’s try and demystify this process.
De-spacing begins when the acquisition target is formally announced. This phase can evoke its own challenges, as messaging to and alignment with external and internal audiences is critical. As a top-5 M&A firm, Lambert offers a full suite of services and expertise in support of transactions, with expertise spanning from venture capital and private equity to billion-dollar public company acquisitions.
Within this early messaging and continuing through ongoing management storytelling, the goal is to effectively communicate the transaction benefits and the long-term value the company creates. This is initially captured through three fundamental IR program elements:
- Developing core corporate messages that resonate with current and prospective shareholders – the nuance here is the diversified set of acquired shareholders that need to be immediately presented with long-term growth objectives and assuring confidence in management
- Defining and identifying contacts within key corporate audiences (buy-side, sell-side, media, employees, etc.)
- Preparing the communications infrastructure, including relevant website, social media, and presentation components, while also introducing and initiating quarterly reporting timelines and framework
- Implementation of integrated investor relations plan, spanning all audiences
- Soliciting support for wide-ranging stakeholders base and instituting a sustained information flow to current and prospective shareholders and followers
- Providing strategic counsel on corporate messaging and preparation for operations as a public company to facilitate effective two-way communications, while making best use of the newly minted management team’s schedules
- Prepare for “show and tell” with new audiences and investors
- Build a briefcase of materials that support these narratives
- Refine institutional, and importantly retail (including customers and employees) outreach and engagement plans
- Continually develop content to build awareness and confidence in the management team, the company’s long-term objectives, and its value creation measurables
Beyond these fundamental SPAC IR program elements, management and key team member training should include instruction on the fundamentals and nuances of corporate disclosure and materiality as well as direction on how to proceed when confronted with “red flag” questions. Early focus should be dedicated to expectation setting and recommended protocols for one-on-one analyst meetings, analyst events and phone conversations, as well as tips on Q&A/interactive discussion and optimal communication techniques.
SPACs are creating access to the public markets like never before—reducing time, expenses, and overall uncertainties. This can not always be said of the de-spacing process, and Lambert is here to ensure these key trajectories are maintained throughout life as a public company, not just at the outset.