PR and IR Alignment Crucial as IPO Market Rebounds

Ryan Flanagan

The current IPO drought began in 2022 with a sharp downturn in activity in which global proceeds declined by more than 70 percent year-on-year, according to PwC. That slowdown is now nearing completion of its third year. Amidst high interest rates and an uneven macro environment, many potential issuers have sought alternatives and delayed their plans to go public, joining an increasingly crowded pool of companies that face uncertain futures.

While obstacles persist, there finally appears to be cautious optimism for a revival of capital markets activity. Encouragingly, the global stock market rally has proven resilient, and economic indicators such as inflation and jobs data are steadily improving. Interest rates are set to decline materially and an election overhang that has given many investors pause is only days away from being in the rearview. Debate remains on whether an IPO resurgence will be a 2025 or 2026 event, and if it will be exhibited as a window slowly cracking open or a dam bursting all at once. Regardless of your view on timing and scale, pressure is mounting behind an IPO backlog that continues to swell, with listings slowly starting to rise as investors and founders patiently seek monetization and exits.

What does any of this have to do with IR and PR?

While strong financial metrics are the tent poles of a successful IPO, company reputation is another core tenet of any effective PR or comms campaign. Likewise, healthy engagement and trust with the investor community are key components of an effective IR program, which can increase the risk profile of a potential deal if not executed properly.

Aside from the most well-funded start-ups, budgets for PR and comms are often much lower spending priorities than non-negotiable expenditures. For its part, IR is often absent altogether or it falls under the purview of an already overwhelmed CFO. In addition, there is a deep perception, particularly among private companies that don’t have near-term visibility into a transaction, that it’s just “too early” to think about IR. Many think that until an IPO process is formally underway, there is minimal upside to investing in this resource. Similarly, PR is often folded into the marketing team, underrepresented and overlooked as a standalone function. As a result, IR and PR often find themselves categorized as “nice to haves” but not “must haves” for many private companies.

The lesson from IPO activity over the last several years is that the window for new issuers can close as quickly as it opens, with no guarantees around the length of the cycle. As such, core IPO readiness items like auditors, underwriters, and a board must be in place. Attention must also be paid to developing the “muscle memory” to consistently deliver your company narrative and having a developed playbook to anticipate investor feedback. These are core competencies of IR and PR that cannot be sped up or developed overnight.

Integration of PR and IR as an effective solution

The most immediately identifiable benefit of breaking down the siloes between IR and PR is the cost-effectiveness of shared resources and content. Cost-sharing substantially alleviates the budget burden that disproportionally impacts private companies, which may be years removed from their last capital infusion.

That said, intertwining IR and PR resources requires a thoughtful approach with many considerations. Foremost is establishing trust between teams, and striking a balance by identifying swim lanes while recognizing shared goals. The sooner teams realize they can leverage each other’s skill sets and develop confidence in their respective capabilities, the more transparent they will be with each other.

As trust is built, collaboration follows, with IR and PR teams co-shaping a narrative and delivering a much more consistent message. For private companies in particular, the opportunity for earned media by a premier outlet, or securing a meeting with a top-tier fund manager, can be infrequent. This challenge raises the stakes for delivering a message that both resonates and stands out, but most importantly doesn’t differ materially between the two audiences for IR and PR.

Unlike public companies whose storylines take years to develop and evolve more slowly as they mature, private company narratives often pivot at breakneck speed as management teams are continuously iterating on product and market fit. This fast-paced approach further drives the need for IR and PR to coalesce around a unified message.

While these challenges greatly impact private companies, it’s also important to note that as public issuers scale, expanding their product portfolios and growing in headcount and market cap, their gulf and connectivity between IR and PR can often widen too. This gap can further heighten the risk of misaligned messaging between audiences, or worse, running afoul of regulatory compliance. That is why it’s equally important to leverage synergies between IR and PR at more established publicly traded companies that may lose their focus on the benefits of collaboration over time.

Ultimately, the goal of aligning IR and PR at private companies is to create a narrative that stays consistent across investor and customer audiences, minimizing risk while broadening awareness and increasing the valuation. With a healthy backlog and IPO window that can’t stay closed forever, it’s never too early for potential issuers to establish a team mentality across the PR and IR functions.

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Ryan Flanagan is a Managing Director in ICR’s Technology Group.