The Non-Deal Road Show (#99)
/In this podcast episode, we cover the mechanics of a non-deal road show. Key points made are noted below.
Types of Road Shows
A road show is one of two things. You’re either going on the road to generally talk about the company to the investment community, or you’re going on the road to raise money. The approach is different for each one, and I’m going to tackle the first version now. In the first case, it’s called a non-deal road show, because you’re not trying to raise money. You normally schedule a non-deal road show right after you’ve released your quarterly results on a Form 10K or 10Q. With this timing, you’ve just made all of your financial information public, so it’s fairly difficult to say anything during a presentation that’ll get you in trouble.
Road Show Destinations
So that’s the timing. Another issue is, where do you go? Well, a non-deal road show should move around the country, so you don’t keep visiting the same people over and over again. If you keep going to the same place and talking to the same people, then nobody new finds out about your stock, and that means that nobody new buys it. And if nobody is buying your stock, then why have a road show at all?
The People You Meet
Now, a non-deal road show is about meeting people in volume. To be successful, you should meet with a lot of people within just a few days. Chances are, you don’t even remotely have the contacts to personally line up a road show. Instead, you use an investment bank or an investor relations firm. They line up the investors and brokers, and then you just show up and do the presentation.
Most of these presentations are to stockbrokers, because there’s a multiplier effect. You talk to them, and then they turn around and talk to their clients about you, so by talking to a couple of hundred brokers, you end up reaching potentially a couple of thousand investors. Now brokers are a different breed. They can show up late and wander out early, and their dress code can be absolutely unique. You may see more sneakers than suits, and I’ve run across a lot of Hawaiian shirts in these meetings, too. And if you offer alcohol, they will take advantage. My favorite was the guy who ordered a beer, and drank it off, and then got it filled to the top with wine – twice. And that was a lunch meeting.
Anyways, the main point is that a broker is coming to your meeting, so treat him with respect. Offer him a decent meal, if you’re doing a lunch meeting, and keep the presentation short. Absolutely do not go droning on in a broker meeting. These people have very little time to listen to you, so get the presentation over with fast – say 15 or 20 minutes – and then open it up to questions.
Road Show Questions
And you will get some very interesting questions. Keep in mind that brokers rarely research your company in detail, so their questions can be really off the wall. My favorite was when the CEO and I were presenting a company that did geographic information systems, like land grid, and somebody asked how we competed in the market against Russian spy satellites. Oh boy. Still, after a few meetings, you’ll have heard just about every possible question, so the meetings do become more routine.
Building a Mailing List
A non-deal road show is not just about presenting information. You also want to build up a mailing list of the folks you’ve met. A good way to do this is to offer a door prize, and people have to put a business card into a pot in order to qualify for it. Then you bring back all the cards and dump them into a database.
One door prize that we used on one trip was a really nice book about recipients of the Congressional Medal of Honor. The reason for that was that one of our board members had been awarded the Medal of Honor, and we got him to come along on the road show and do a short speech. Since he’s a fairly well-known television commentator, that really helped to bring people to the meetings. The problem was that at one of the meetings, a stockbroker walked off with the book – just stole it – so we had to order another book for the person who actually won the prize.
The Road Show Presentation
Now, because you’re dealing with a lot of people, you really need to have a presentation on a projection screen. It’s not workable to just hand out a PowerPoint binder and walk them through it – though there should be a handout.
This type of presentation has some implications. First, you will need a lot of handouts, so you have to lock down their contents before the trip starts, print out a bunch, and either lug them around or mail them ahead to the various hotels. If you’re doing multiple cities – sometimes several cities in one day – then it can be tough to link up with the handouts if you mailed them ahead. For that reason, I prefer to carry quite a few with me, and then replenish the supply from whatever we already mailed ahead.
As for the projector, I prefer to drop that one on whoever is organizing the trip, so that they supply it. And then I bring another one as a backup. I’ve never had a projector fail, but of course, having said that, it’ll probably blow up on the next trip.
Another issue about a non-deal road show is that you’re talking in front of a lot of people. And let’s face it, most accountants are a pack of introverts. We don’t like to do this. The worst I’ve ever seen was at a CFO conference in London. I was presenting, but I had some time off, and so I sat in on someone else’s presentation. And this poor guy was dying – sweat just dripping off him, and he had to keep stopping to wipe the fog off his glasses.
There are some ways to avoid that. Before the trip begins, stand up in front of an empty room and run through the speech four times. At least, that’s the number I use. I find that I screw up a lot on the first pass, but that I’m not really getting much better after doing it four times, so that’s a good stopping point.
The other thing you can do is just before the presentation. Stand in the doorway to the meeting room, and greet everyone who comes in. You don’t necessarily have to shake hands, but make eye contact and say something. If you can engage in some small talk, that’s even better. Then, when you look out on the audience for your speech, you at least have a little familiarity with the audience. This really helps.
Now, to turn that around, that means you do not stand off a corner in a little group before the presentation starts. You really, really should mingle with the audience.
Non-deal road shows get a lot easier over time. After you’ve done a couple, you only need to tweak the presentation each time, so there’s less need for any sort of elaborate dry runs. And also, you’ll have already been hit with every possible question, and you’ll know how to answer them.
It still makes sense to have someone review the presentation and make suggestions every now and then, so it doesn’t get too stale, but that’s basically it. So in short, a non-deal road show is about spreading the word in a canned presentation to a lot of people. It’s more stressful at the start, but it gets easier over time.