Roadshow Presentation

A part of a series of presentations or sales pitches.

A roadshow presentation is a part of a series of presentations or sales pitches done by a company's management and/or the underwriting investment bank prior to conducting an initial public offering (IPO).

When a company is choosing to raise capital via an IPO, the company's management team and, at times, the advising investment bank, will meet with institutional investors to build up the order book for the offering.

The order book contains large volume offers from financial institutions such as hedge funds or pension funds on the security, which help aid in the proper pricing of the IPO further down the line.

The roadshow presentation is of paramount importance in the IPO process as institutional investors make up a large portion of the number of shares purchased. Thus, a successful roadshow presentation series can make or break an IPO. 

Roadshow presentations most often occur in large cities such as New York, Boston, Chicago, Los Angeles, and San Francisco. The process, on average, takes about three weeks, with a mix of different meeting styles.

Large "blue chip" investors typically garner one on one meetings while other highly important institutions will have small group meetings or large group meetings such as a luncheon. 

Roadshows can also be pre-recorded presentations shared over the internet, known as netshows. 

Roadshow presentations contain an immense amount of information pertaining to the business, its management, its past, and its future outlook. 

What is Covered in a Roadshow Presentation?

It has pretty standard core topics that need to be addressed to ensure that a successful "hit rate" is achieved and demand for the offering is cultivated. Typically, they start off with an introduction of the company's management team and C-suite executives. 

The presentation should also have an in-depth look into their earnings and overall financials. Another vital section is their recent past, current, and future outlook on key drivers of the business. This typically includes data and projections on items such as sales or revenue.

Additionally, over the IPO process, the company and its advisors craft a story to sell to investors on the company, its growth prospects, competitive advantages, and the reasons why it should receive investors' capital. This is also thoroughly covered in the presentation.

The details of the offering itself are a topic of discussion, including the size of the offering and IPO stock price target. Investors attending roadshows have the opportunity to then make offers in a few different ways.

Investors can place stock orders. 

Ex) 2,000 shares at a price of $20

Or they can place limit orders in which there is a cap on the price paid per share

Ex) 2,000 shares at a price per share of no more than $18

Post-Roadshow Process

After the roadshow presentation series is complete, there is still much work to be done before the successful launching of an IPO. 

The underwriting investment bank follows the roadshow presentations, collecting all the offers from the order book and analyzing the supply/demand dynamics of the offering. This analysis helps further educate the team on selecting the optimal IPO price. 

After the conclusion of this analysis, a final prospectus is drafted, reviewed, edited, and published. This final prospectus is then used to further advertise the offering to potential investors. 

The prospectus is also sent to the Securities and Exchange Commission (SEC) for approval. Following SEC approval, the offering date and price per share are set and ready for launch.

When the IPO day comes, the shares begin trading at the designated price at the beginning of the trading day. Oftentimes, initial public offerings will have great price appreciation in the first few days or weeks of trading, as the pent-up anticipation enhances demand.

The funds received from the sale of the predetermined number of shares are then obtained by the issuing company. Following the IPO, the company may be able to engage in follow-up offerings, which can sometimes involve a similar roadshow presentation process to the IPO.

Initial public offerings are a key way for businesses to grow and scale their operations through the funds received from selling an equity stake in the company. The roadshow presentation is a key step along the road to a successful IPO and can be the deciding factor in whether or not its goals are met. 

Key Takeaways
  • Roadshow presentations are sales pitches done by companies pursuing an IPO
  • These presentations are done to entice institutional investors and spark demand for the offering
  • The presentation contains a management overview, the business' key drivers and growth opportunities, a financial overview and projections, and a "sales story"
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Researched and authored by Charlie Fair l LinkedIn

Reviewed and edited by James Fazeli-SinakiLinkedIn

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