Companies consider outreach benefits in filing for an IPO

When Facebook announced it would list its shares on the NASDAQ it was considered a huge win for the stock exchange, which has been battling the New York Stock Exchange (NYSE) to win high-profile tech listings in an otherwise weak IPO market.

When Facebook announced it would list its shares on the NASDAQ it was considered a huge win for the stock exchange, which has been battling the New York Stock Exchange (NYSE) to win high-profile tech listings in an otherwise weak IPO market.

Last year, NYSE scored listings from such companies as LinkedIn, Pandora, and Yelp. In addition to Facebook, NASDAQ recently won filings from Groupon and TripAdvisor.

Leigh Parrish, senior MD in the strategic communications practice of FTI Consulting, says companies today face a more difficult decision in evaluating the benefits of each exchange. "They operate more and more alike these days," she says.

The NYSE has beefed up its electronic trading capabilities and has made its listing requirements more favorable to smaller companies. And while NASDAQ made its name as the home for tech upstarts, some of those entities are now the size of blue-chip companies found on the NYSE.

PR adds value
Given the more level playing field, Parrish says many companies ultimately make a decision based on the marketing and PR services each exchange offers as part of a listing package. She says those services can add a lot of value to helping raise the profile of a company's IPO.

Which Exchange Is Best for You?

IR firm pros say the decision of which exchange to list on has less to do with trading fees, which are nominal between the two, than other tangibles:

Company you keep. Is your competitive set on the NASDAQ or NYSE? What about your clients?

Promotional/media opportunities. Many CEOs dream of ringing the NYSE bell. NASDAQ can offer advertising space in New York's Times Square. Which exposure is of more value to your brand?

Brand affiliation. NYSE is considered the home of blue-chip companies and NASDAQ of younger, tech companies. However, keep in mind the two exchanges are no longer as distinct as they once were

"I'd recommend a client have both their marketing and PR people involved in the decision-making process," says Parrish.

Splunk, a data analytics software maker, was aggressively courted by both exchanges. The IR team led the decision-making process, but the PR team also had input into the proposals from the exchanges, says Ken Tinsley, the company's IR director.

"As a tech company, we're predisposed to the NASDAQ," he adds," but we took a neutral approach and had both tell us what they could do. Each was creative in terms of offering services that fit our overall outreach strategy."

He says Splunk ultimately listed with NASDAQ in April in part because of its services such as Shareholder.com, a subsidiary that helps companies with compliance and transparency in terms of shareholder communications.

Splunk also considered the traditional PR opportunities offered by both exchanges, says PR director Paul Wilke.

"Our company had talked to tech and Bay Area business media, but a lot of financial media hadn't even heard of us," he says. "NASDAQ's in-house PR team helped us navigate the waters in terms of financial media."

In fact, on the day of the IPO, Wilke says he was just as likely to get calls from Splunk's PR firm, Lewis PR, as from NASDAQ to set up media interviews. "It was like having two PR firms working for you," he notes.

Great exposure
NASDAQ also offered Splunk exposure on its seven-story electronic billboard in New York's Times Square. The PR team at NASDAQ suggested to Wilke that they use the real estate to run a Twitter stream of what people were saying about the company.

"As I monitored the Twitter feed, I highlighted my favorites that represented what we're all about," he says. "It was a great way to get our brand story out."

Erik Knettel, senior MD at Grayling USA, says both ex-changes "have wonderful platforms for unique listing-day events that can tie into a company's brand positioning and maximize their brand visibility."

Ultimately, he adds, companies must decide which platform provides the best fit and can create the most buzz on IPO day.

"A company has one chance to do this," says Knettel. "It's important to look at how the exchanges can help make the day memorable for management, employees, customers, and shareholders."

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