The pandemic has permanently changed IPO "road shows"
Public market investors have come to view most IPOs through rose-tinted pandemic lenses: Either an issuer benefitted from lockdowns and will hold onto those new customers or the issuer will benefit from widespread vaccine distribution.
Yes, but: Things will return to normal, but the path will be up and to the right. One thing that's changed permanently, however, is the IPO process itself, as the traditional "road show" is dead and buried.
- In the past, top company executives and their bankers would hop a private plane for a weeklong trip across the country, meeting with groups of large institutional investors in top hotels.
- But in 2020 those meetings have gone virtual, due to the pandemic. Not only have U.S. IPOs not missed a beat, they're on track for one of their busiest years in history.
Bankers tell me that virtual meetings have enabled companies to engage in deeper and more numerous investor meetings, enhancing the process. Some CEOs and investors may miss the more tactile experience, but the trade-off has been worthwhile.
- Consensus is that post-pandemic IPO processes may again include physical stops in Boston and New York City, plus perhaps San Francisco for local companies, but that will be it.
- Smaller investor markets, like Philly, Atlanta, Los Angeles, Kansas City and Dallas will be done remote.
The bottom line: The year's biggest IPO innovation may be sitting on the living room couch, not hybrid listings.