Mark Fasken: This is Winning IR, a podcast exploring the diverse insights within the IR community. Join me, Mark Fasken, as I sit down with IROs and other IR stakeholders to discuss the winning strategies, tactics, and shifts in thinking that are redefining the profession.
Today's guest has advised on over 35 go-to-market transactions across IPOs, Spins, SPACs and traditional M&A. Alex Jorgensen is the Managing Director and Head of Investor Relations at Prosek Partners, and is responsible for leading the company’s IR advisory practice. In 2020, he was named to the National Investor Relations Institute’s 40-Under-40 list recognizing impactful IR professionals, and currently sits on the committee of its New York NextGen chapter.
Alex has a diversified IR and corporate communications experience spanning the financial services, media and entertainment, technology, healthcare and life sciences industries, and I’m thrilled to be able to share his insights with you on this episode of Winning IR.
Mark Fasken: Okay so Alex wanted to kick the conversation off with a sort of a foundational question you could say: As a company you've decided to go public, is there a traditional team that you build for that process, and what are the primary components of it?
Alex Jorgensen: Hey thanks Mark in just also want to before I launch in, say thanks for having me today, it's a great question and yes, the answer is absolutely and what I always say is that there's what's optimal and there's what's realistic, right? And that and what's realistic is going to change for every company we work with but what's optimal really is three components: you have a legal partner that you're working with and there are so many SEC filings and so many SEC regulations that you need to navigate in the path to becoming a public company, that that legal partner is crucial. You're going to be in the trenches with them you're going to work with them. In addition to the legal component there's obviously a banking component, right? At the end of the day you're going public because you want access to capital, whether you're raising money through the IPO whether you're doing an ADR because you want access to investors in a certain market, whatever path to becoming a public company you're taking, the short summary of why you're going that way is that you want access to capital. And so your banking team is crucial and what I say about your banking team is that that is as relational as anything. And the third component that really we're talking about today is the communications component. In my opinion that component spans both public relations disciplines as well as investor relations disciplines. And you need both because at the end of the day if you have a extremely fundamentally sound IR strategy, you have an amazing narrative, but you don't know how to amplify that narrative, and you don't know what channels you can amplify that narrative through and around the regulations that that were afore mentioned, then you're going to leave some money and opportunity on the table.
And so really that communications advisor where I step in and where I partner with many companies and what I say is the key difference between the other two components of the working group is that because you're going public you're looking at a point in time ,you're looking at a listing day or you're looking at a specific fund raising moment in time ,where we try to focus the companies we partner with as well as the internal IR teams we partner with is are you thinking about your fifth earnings call? So after you’re public, think through what it means in a year or two as a public company and some of the things you're saying both with your legal partners in SEC filings as well as your banking partners when you're thinking about fundraising meetings and investor meetings. Are those things setting you up for two or three years down the road?
At the end of the day when you list, a lot of your working group is going to retreat, and they should, right? Like those really big fees you're paying to go public are now behind you, you don't want to keep paying those really big fees, but you should have some sort of understanding and eye to the future. And ideally where we at least fancy ourselves as partners is that we actually stick around, we stick around with the companies that IPO, even if they have internal investor relations teams for years to come.
Mark Fasken: Do you, not to jump ahead to a question we have little bit later, but do you feel like that communications aspect in the sort of positioning aspect is a place where companies often under invest? Like I feel as though some companies are like “hey we've got our results we've got our story, the results speak for themselves quote unquote”, and sometimes that idea of the amplification and everything sometimes gets pushed to the side.
Alex Jorgensen: I agree with that. I think every company I've ever worked with desires the big broadcast interview the day they list. I think where companies maybe don't have the full picture from time to time, is that you know CEOs aren't waiting in a line outside of CNBC the day they list, like to get on the air. It takes months and months and sometimes years of relationship building to get on these different broadcast opportunities in addition to the broadcast opportunities, to your point Mark, I think we need to make sure what you're saying in those forums square precisely to what you're saying in investor meetings. And if they don't or if one feels disjointed, your audience is going to know that, and so it's not just “I really hope we can amplify this news” it's also “have we strategically thought about how this message is going to play in different forums?” You might say it differently in an investor meeting than you say it on Bloomberg TV, but the message should be the same across both sides.
Mark Fasken: Right yeah I really like that idea too of thinking four or five quarters ahead. Like is what we're saying now setting us up, are the things we're doing now setting us up for success in the future? I think that's great.
So that sort of thinking around, “Okay I'm going, I'm in the process, right like it's happening” um maybe we'll take a step back for a second, now let's put ourselves in the shoes of we’re a company, IRO, CFO, maybe look at it from from different perspectives: I'm like nine months away from my IPO, what are some of the things that I should be thinking about beyond the team which sort of covered that that element of it?
Alex Jorgensen: I think it really comes down to one foundational document, and it's that perspective. It’s that S-1 if it's an IPO, if you're looking at a SPAC or some sort of public merger or reverse merger it’s that S-4 filing, and it's really building your box. And again, that team that we just described is going to be crucial because those are the different people who are thinking about this, but that communications partner can be really strategic because at the end of the day your legal team is going to help you not violate any regulations, your banking team is going to help you look at the competitive landscape and say “this is what other people have said,” your communications team is going to dig in with you and tell your story. And in those filings is the cornerstone of your narrative. So if you are doing this effectively and you’ve built an S-1 box that tells your story, it gives you a business overview, it looks at the competitive landscape, it takes a look at the growth strategy, and it also looks at your own competitive advantages. If it has those four components, and it's fully baked, those four components are going to follow you throughout the rest of the IPO process. You're going to build your investor presentation for meetings with investors from those four components. You're going to build your talking points for media interviews. You're going to build anything you say in the public forum has to come from that document, so I would say nine months out, I always say there are so many things you could be focused on if you can give all your time to this filing and get it right, every other domino will fall, or we can spend less time on an investor presentation and get that right in a really short know window. But if we get the narrative wrong the rest of it just doesn't work at the end of the day.
Mark Fasken: Is that narrative? I mean a lot of these companies that are going public most of them been around for quite a while, they've been around for years already building their business. Is that narrative and building those documents, do you find that it takes very different perspective than what they're used to? Like many these companies have maybe gone through the process of raising money through private markets, is it a drastically different exercise?
Alex Jorgensen: I think it is because private markets investors and public markets investors are different stakeholder groups. That is not to say that there are not cross over investors that do both, right, that are now in the whether in a PE firm or VC firm and investing in the private markets as well as the public markets, but I would say the majority of your audience is going to be unique to the public markets, and so in that process they're looking at your public peer group. probably far more than when you are in your private raises. Yes I think there are absolutely extremely valuable resources like CrunchBase and other things in the private market world that will help you build a peer group in a peer set and bench mark yourself against them during that fund raising process. It's kind of ramped up to eleven when you go public because the likelihood is that you have whether it's three or twenty direct competitors that are currently public, which means their filings are public, their financials are public, their strategy is public, and that is public record and so an investor coming into that meeting maybe has done hours more homework on the competitive landscape.
And so what you need to do is know your differentiators, you need to know how to tell your own story. But one of the most common trappings we get into with management teams is, iIm living and breathing and bleeding my story every day we need to help them kind of come up come up the altitude curves a little bit, go twenty thousand feet in the air and say, “okay this is a generalist investor who might not even know my industry, I have to have a pitch that is salient with them as well as an investor who just did all those hours and hours of “homework” that I just described. You're going to have meetings that are back to back where someone says “yeah just walk me through your presentation,” you're also going to have meetings where someone walks in with a legal pad and takes you to task on everything that your public peers have done for the last five yeah.
Mark Fasken: Yeah knows your business extremely well, and your competitors and everything that they're doing. So it's almost like that the level of detail that you may have to get into these meaning can be far beyond what you would have, because previously most of the investors you're speaking to, like talking about venture capital, they understand the industry understand the dynamics but they're not digging into detailed financials with a lot of your peers like most public equity investors would be.
Alex Jorgensen: Absolutely and and there are going to be, right you prepare for the worst you hope for the best, there are going to be meetings where an investor absolutely just asks you to walk through your presentation and give you a really simple pitch and they ask really simple questions and you walk out of that. The trick and the hardest part is the jusxtaposition of it all. You just walk you just went through a twenty minute war across the table from someone who knows your business, feels like they know it better than you, and then you go into this meeting where the person is just ready to have a really leisurely conversation. And you have to be able to transition really effectively and not be off your game or off your guard. It's funny because you hear about these long road shows in the IPO process and it's oftentimes as ten meetings throughout the day ,these meetings range anywhere from thirty to forty five sometimes an hour, but usually it's thirty to forty five minutes. And that doesn't sound like an absurd amount of time, you experience management teams that it looks like they just ran a race at the end of these meeting days, because it's just grueling, and you emotionally are just drained at the end of those days.
Mark Fasken: Yeah I can imagine. I've been there sucks. It sucks yeah. So maybe kind of going and talking about the story there's one other way I wanted to answer this question or ask this question is
Alex Jorgensen: Absolutely I mean you've experienced it right?
Mark Fasken: As you go public you have to also, it seems like, explain why you're going public right? There's one element of telling the story: who are we, explain your company and your story, but there seems to be another element of why are we going public ,so how do you suggest companies think about that?
Alex Jorgensen: Well it goes back to what we talked about in the first question ,which is you want access to capital. And so we need a good reason for why you want access to capital, and then once we have that we need to explore the route you're taking, because ideally that route is either solving a strategic need, or is going to be your cheapest form of capital to raise in that moment.
Now in the most recent year we've seen the IPO market effectively shut down, and that's because it stopped being the cheapest form of capital available to most companies. Most companies could raise an awesome you know round with a private equity sponsor and that would solve their needs, it would give them a lot of optionality, they wouldn't necessarily be beholden to all of the cost of going public and that's great. But in 2021 and 2020 we saw record setting numbers of companies going public, and to your point Mark, I think a lot of companies did not think about “okay we raise this money what's on the other side of it? And why are we raising this money and why now?” And if the answer to “why now” is, well it seems like a lot of companies are doing this right now, we probably need to look at what is the deeper and longer terms justification for going public. You know some really great examples of this are I've seen companies that pursued a SPAC transaction because it allowed them to combine two entities with the SPAC vehicle in one fell swoop and become a public company. Now that is unique to that transactio,n it gave them access to capital because they eventually got access to the pipe round they raised in the SPAC transaction they got access to the trust that the SPAC had raised borrowing any redemptions in the shareholder vote, but they also merged in a transformative way with another entity and went public in one one transaction now that was complex every lawyer and bank right worked with on those transactions said “this is extremely compex, we wouldn't recommend everyone does this” but when you sat across from an investor and they said “why are you pursuing this route to market particularly when there's so much conversation and conjecture around the quote unquote SPAC vehicle and SPAC bubble”, that was a really strong answer that investors often times didn't argue with because they saw “oh wow this management team has thought through not just the access to capital piece, but the strategic nature of it.”
Now on the IPO side there's similar strategic reasons for that. The fact that as an IPO company they will not only raise money in the IPO process, but have access to secondary raises. Many companies go public because they see five or six bolt-on acquisitions that they can make if they just have that pool of capital to deploy, and that's a great reason to go public, and that is amazing thing to tout in your investor meetings from a strategic point of view. And so yes it's access to capital, yes is this capital strategic and cheap for our company, but it's also well what is your road map? You know maybe it comes down to you are an extremely successful company you're already have an amazing growth trajectory, but this capital is going to let you pay down debt and in turn going to expand margins in the next few years. There are so many ways to tell this story, and every company has a different reason, and it's key that you have a partner that can help you kind of pull the right levers and figure out what your story is.
Mark Fasken: Right and it seems like just given your points on the dynamics of the markets right now it's only going to become more important that companies have a really solid “why” as they're going public, because to your point. just saying well we're just looking for access to capital is not gonna be enough because the question isn't going to be what are you going to do with it once you once you have it, right. It seems like us more and more pressure moving forward.
Alex Jorgensen: Of course.
Mark Fasken: We've talked a lot about what companies should do, best practices, how to build the team, thinking about “the why are we going public”, talking about sort of getting that story and really understanding the competitive landscape and mapping that out really clearly. What about what companies shouldn't do or areas where you've seen companies under invest?
Alex Jorgensen: I think that it's a great question. I think that there's two areas and they both relate to time um companies that are going public to your point Mark, earlier in this conversation you said they've been around for a few years and as such there's CEO and oftentimes their CFO are maybe founders, maybe they’re early employees to the company, or maybe they've just been there for this most recent chapter of growth and they solidified their credibility within the organization. And so they there's a lot of reverence given to these two positions, as there should be by the way, that said when we get to the fundraising point to your question Mark, earlier the CEO and CFO might say “I’ve done this before I've raised private capital before, I don't need to practice my pitch, I don't need to practice my dry run for an investor meeting, I don't need to go over the dos and don'ts of investors, Im not in grad school,” that's kind of the disposition or that can be a really tough dynamic. And where I've often found the rubber meets the road or where we come alongside companies maybe that internal team doesn't feel like they can say, “we actually think you have ninety per cent of your pitch down but this ten percent that you need to work on is going to be contingent on potentially hundreds of millions of dollars to this equity race, and so let's get this right even if it means two hours in a room.”
And having a third party that doesn't work at the organization can be effective and can be deployed for that purpose, and so it's not to be a sense of, it's not to put any CEO or CFO in a situation where they feel like they're lesser than, it's more to say, “Hey as a third party from an objective standpoint I think this can be stronger, and I think these are the ways to do it.”
Now most CEOs and CFOs aren't CEOs and CFOs because they're not competitive, they're usually pretty competitive, and so they are you know in sports we always said “are you a gamer” meaning you know, practice I can care less about but when the when the lights, are on when the games going, I'm a gamer, I can perform, and that's how a lot of management teams approach investor meetings, that it doesn't matter don't take me through a dry run when the lights are on i'm going to shine. That's true in many instances, but where I found very effective ways to navigate kind of management teams who maybe don't see the importance of press is try to schedule a friendly with an investor, try to make sure that the testing the waters meetings that your banking partners are setting up starts with a friendly that you know, and maybe has an hour long break after it, so that that the CEO and CFO can see maybe some of the limitations in their pitch and if you can set up those friendly meetings you can find a way to say, “Hey you were there, you experience this I think this needs to be tighter.” And if you if you can kind of get to that point, and everyone comes around the issue and really realize we're rowing in the same boat let's all row in the same motion, that's where I've seen this process really come, that's quite frankly where you know you get chills in the process that's where you realize, “Holy cow we just did something that's going to define the next era of this company and in turn it's going to define the next few years for the folks I’m working with.” And that’s when it becomes super gratifying.
Mark Fasken: Yeah I think that's a great idea and I mean I know that there, even after going public, right, story changes narrative changes over time. I’ve heard IROs talk about speaker training for CEOs and CFOs and things like that, and I think that's also an effective way of doing it, of “Hey whether we're going they're doing an IPO or whether we've just got a new narrative that we’re working on,” that idea of sort of doing those friendly meetings and having times to actually sort of unpack it all and and talk about next steps is a great idea.
So you’ve done yeah over thirty five go to market transactions in the last few years what are some of the most common challenges that you face other than gamer CEOs and CFOs?
Alex Jorgensen: Yeah well I would also caveat that if you've done go to market transactions long enough you know that baked into some of that number are transactions that didn't work out, meaning there are a lot of hours there are many companies that are currently on file that are not in the IPO process meaning they wrote an S-1 or they did everything they needed to do to go public, but they're not going public and so baked into that thirty-five number are a number of companies that are not publicly listed at this point in time, but went through everything had a banking group, had legal partners, had communications advisors and quite frankly in a different world or in a different year would be a public company today, but market dynamics may have shifted that. I think that ultimately what has been common across all of those you know thirty-five transactions is that each one is unique and each one has a different set of challenges as well as strengths.
I will tell you that the most fun transactions I've worked on are not the easiest ones, and the challenges that we face whether, they’re external or internal are surmountable because we feel like we're a part of the team meaning, whether it’s the banking group, the legal team, us, as well as the issue where the file are the company themselves, we all feel like we're part of the same team. And when you feel like you're part of the same team and that you're pursuing this together, even if it's complex, even if you face challenges, even if you totally you know dropped the ball in an investor meeting, those are the ones that just are so much fun because you get, no matter what you do these are going to be late nights, there's going to be challenges, I've never worked on a transaction where the CEO doesn't snap at me at least once, it just is it's the nature of the beast, and if you don't have a thick skin and can't take that then this isn't the line of work for you. But what I would say is that it's not personal, it's such an immense amount of pressure that these people are under, and if you look at this objectively, oftentimes these CEOs and these CFOs are thinking about such a big team of people that are supporting families and are supporting lives, and this path becoming a public company is actually providing a livelihood for an entire sometimes thousands of people, and it's really really powerful to think about. You don't want to overstate that or you know think about that for too long because then you end up kind of you know navel gazing, but I do think that that is what makes this line of work powerful that's what makes this line of work. You get deep with management teams super quick so without kind of that what we already talked about, the kind of underselling the amount of prep needed, that is a relatively common stumbling block that I’ve faced.
And then the other thing that I’ve seen is just companies that truly don't understand how much time this is going a take, how many nights this is going to take away from the family, how many you know this is oftentimes a twelve to eighteen months process even longer for IPOs, shorter for some of the reverse mergers or SPAC but you kind of cancel your holidays that year, you cancel your vacations that year, you're going to miss some stuff with your family and that takes a toll on people.
Mark Fasken: And I think to your point it's like you just really got to be got to be committed to the process you got to understand what you're getting yourselves into, you got to be able to deal with that pressure so I imagine you spent a lot of time sort of shepherding people through that process, being the shoulder to cry on at times or the punching bag either one.
Alex Jorgensen: Yes I think both ends is the answer to that. But I also think that if you can take a step back and just have empathy in your role, you know Mark we both lead teams there are plenty of days that I guarantee I'm not the the best leader I could be, and in the same regard you know no one is immune to that and if anything I think that these executive teams and management teams are under even more pressure than then what I've faced. And so if you can have that empathy and still kind of toughen your chin, speak truth to power, it's not your job to just accept what a what a management team tells you to do, it’s your job to tell them what you think is best practice and really advise them strategically. Then I think there's just you emerge from those conflicts and from some of those things just so stronger and you have deep relationships with CEOs and CFOs that you know they might not you might not even work with them directly after the IPO or SPAC, they'll call you twenty four months down the road when they have a really sticky situation, and you get to work with that and those are the those relationships are forged in the IPO process.
Mark Fasken: So I have two more questions, one of them sort of is off the back of a comment that you just you actually just made around some of those companies who didn't go public because the market dynamics just weren't right, and so timing seems to be a big part of of the IPO process and in getting it right. Seems like you feel that that it's an important part of of the decision making process, but anything else you want to add? Like do you think that a company can overcome timing issues? Like you look at the market now, like do you think that a company that is you know really has has their stuff together has a really solid story that they can overcome those timing issues? Or do you think it's just like, no you still should should wait it out.
Alex Jorgensen: I think that it comes down to exactly the teams that we've been talking about access to capital and what is the most efficient way to raise that capital, and so at the end of the day there are companies that are going public in this environment there are spin offs, there are a number of ways that companies are finding upaths to becoming public companies that are unlocking value. In that case yes people can go public in today's environment.
If someone or a company is looking to go public, and they truly can raise the same amount of capital in the private markets it's their fiduciary duty to explore that, and so I think you saw this a ton in the 2017-2018 time period. Companies were full tracking their fund raising process, so they were preparing to go public and preparing to IPO, and they were also shopping you know opportunities in the private markets, and or they were acquisition targets for much larger public companies, and in some instances you saw companies that were set to go public that in a certain week that announced the transaction in which they were acquired that exact same week. And that was such an interesting time but when you work on a transaction like an IPO it can kind of be deflating when you're in my seat, you're like “oh we worked we worked so hard for this and it's all for nought,” but at the end of the day hopefully it goes to me it always goes back to you know making sure that it's right for the company, because if it's right for the company then it's probably right for the management team, the employes of that company, most importantly the stakeholders of that company. And if you can find a way to raise capital in a more efficient manner than going public listen most companies are going to explore that route because being a public company isn't just expensive when you go public it's expensive to stay public, um the amount of time you need to spend around SEC filings and earnings calls and if you can avoid those I completely understand why management teams would. So the answer is yes, it all comes down to access to capital and what's the most efficient way to gain that access.
Mark Fasken: Oh it's a good point. Almost sort of as a follow on to your point about understanding the time it takes to actually go public, but that's the second part not everybody thinks about “okay now I am what are all the things I need to do, all of the reporting and everything as it's a lot.
Alex Jorgensen: Well and you saw that in 2021 so many companies went public and we saw this last year when the market turned, all these companies were public, and whether it was profitability guidance that companies were giving that was just totally off, because they underestimated the cost of being a public company, and you know management teams had to reckon with their ability to lead their own companies, because I don't think a lot of people gave the reverence required to being a public company. And that's a weird word to put around it, the reverence around it, but it just it really comes down to the way I always look at this is: I'm helping people create jobs, which in turn is going to fuel the lives of families and so if you don't have reverence for that, then I think you're going to hurt a lot of people and that's the biggest thing to me that that i think you need to consider especially in this line of work.
Mark Fasken: Yeah I think that's a great way of thinking about it. So last question, it does go back to something you mentioned earlier, which is doing what's right for the various stakeholders. You know you're managing a lot of different expectations and audiences as you go through this process, the employees, investors, a bunch of different stake holders, so how do you recommend companies manage those different expectations and audiences and stay focused on the task at hand?
Alex Jorgensen: Meaning um you know if you were to take every stake holder that this process impacts, the list would be pages long right, whether it's you know you have partners, customers, vendors, employees, et cetera et cetera et cetera.
I think it really comes down to a lot of times I rarely need to have this conversation with management teams. If the management team is in this position most of the time they're there because they are extremely ambitious, and they're extremely competent, and they're extremely talented, so they don't really need you know pep talk in many ways, um but I think it all comes down to the track record that got you there. Even if it's a short acceleration meaning you're a tech company that didn't exist five years ago, but you did something, you had an idea, and and you executed it well enough to get this far, and if that's the case then it's not just about your company going forward, it's about your go forward team.
And if you can build the right team around you then you can accomplish anything. And I think that the hardest part to your point Mark is the overwhelming feeling that the world is on your shoulders. But public companies, despite lawsuits and how those come up, you know coming down public companies are never one person, it's a lot of people ,it's a group of people, and it's a lot of decisions by committee. And we started this conversation by talking about the team that you would build to go public, you need to build a team to go public you need to build a team to stay public, and don't underestimate that. And if you don't underestimate that then you can let some of the stuff fall by the wayside, and you can get a little more zen about it, and think about “Okay I have a team that I trust therefore I can't worry about every single thing”.
You know early in our conversation we were talking about people who go from managing a team of ten to managing a team of ten thousand. Inevitably their management style is going to change throughout that evolution, but at the end of the day their team should change with it, and if their team is something that they trust, and full of people they trust then I think they can surmount the challenges that come their way. But I agree I think it's it is an overwhelming process, and it should be. You know I think we have a conversation with every management team when they're going public and my colleague David Wells who recently passed away taught me this, is the day that a company goes public, the day they list, pull the CEO aside and just tell them to enjoy it because if they do this right they probably are going to do this once, you know maybe they do it a few times, they better enjoy it and if they do that their team is going to enjoy that, and if their team enjoys it they're going to be motivated to do the right thing, they're going a be motivated to continue to work and be led and be stewarded by this person, and most importantly they're going to set this company up for years and years of shareholder value creation and stakeholder value creation for that matter.
Mark Fasken: Yes I think it's interesting like so much of this conversation just to kind of like wrap it together, I think it really comes down to in summary setting that vision in that narrative early on, making sure that you have the right team in place to support that narrative and that vision, and that there's the right people in place to also sort of give you the feedback and that direct feedback that you need to adjust your approach, but making sure that everybody's rallying around that vision so that maybe if there are questions or doubt or hardship as you go through that process you have that clear vision you have that clear narrative and everybody can sort of keep you know helping each other in the in the right direction seems like that that team is such a core piece of it.
Alex Jorgensen: That's exactly right and and really viewing it as a team is how you get through it because if you try to carry this burden alone or with a discounted team, you're going to miss something or or you're going to make a knee jerk decision that you don't need to make. You can you can make a much more clear headed one with the team.
Mark Fasken: It's awesome Alex thanks so much this has been great really appreciate it and hopefully we can do one again soon.
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