Types of Roadshows That You Can Choose From For Your Next Event
Are you someone who is developing an interest in the Capital Market? If yes, then you must have come across the term “Roadshow”. But do you know how many types of roadshows are there and what purpose they serve? Well, if you don’t, then not to worry because this article will help you with that. So, with no further delay let us look into the different types of roadshows.
So, let us start with the question – what is a roadshow? A roadshow (also known as deal roadshow), in the capital market parlance, refers to the sequence of exhibitions conducted by the management of a company to demonstrate their competence to some of the key members of the Buy-side market. Examples of such buy-side participants may include broker-dealers (syndication partner), money managers and institutional investor groups. A roadshow is primarily intended to share more information about the issuer with the market participants through presentations and Q&A set-ups. In fact, investors also see this as an opportunity to assess the competence and skills of the company management, and as such, a well-executed roadshow can result in a successful deal.
A roadshow typically comprises one or two weeks of extremely hard work for the top brass of the company as it involves multiple presentations and meetings in a number of different cities. While the roadshow is taking place, the underwriters remain busy in building the book of interest which eventually helps in determining the price of the offering.
The Deal Roadshow can be divided into two major types:
1. Free Writing Prospectus
2. Oral Roadshow
Free Writing Prospectus or Written Roadshow
A Free Writing Prospectus or Written Roadshow refers to any written communication that provides an offer to sell securities. The different form of written communication may include print, television or radio broadcast, all forms of electronic media, such as audiotapes, videotapes, CD Rom, internet websites, electronic mail, voice mail systems, computer networks etc. In fact, any electronic roadshow that doesn’t associate with a live presentation is considered written communication.
Although written roadshow can be a very strong communication, not everyone is eligible for conducting one. The list of such ineligible entities include:
- Entities that have been blank-check companies during the past 3 years
- Entities that have been shell companies during the past 3 years
- Issuers of penny-stocks
- Companies that have offered to sell penny-stocks during the past 3 years
- Companies into business development
- Entities that have delinquency in their Exchange Act reporting
- Limited partnerships engaged in a non-commitment offering
- Entities that have been forced into bankruptcy or filed for one during the last 3 years
This is the type of roadshow is purely oral, and as such, there is no specific requirement for SEC filing. However, a company is required to submit a Form 8-K in case the oral roadshow implicates the Regulation Fair Disclosure.
Interestingly, any communication that is provided along with a road and not separately is considered to be a part of that roadshow. As such, communications in the form of handouts, video clips and slides (which are otherwise part of written offers) are considered to be part of the oral roadshow as long as their copies are collected at the end of the presentation and not left behind. However, in case these communications are left behind, then they become a form of a written roadshow.
Entities that are not eligible for written roadshow usually use oral roadshows and that typically includes small- and micro-cap issuers.
Further, there are some other forms of roadshows which are slightly different from the traditional roadshows. They are:
- Reverse Roadshow (intended for sale)
- Non-deal Roadshow (not intended for sale)
In this type of roadshows, the investors are able to visit the operational plants of the companies as per the itinerary scheduled by the brokers or the investor relations companies. This approach of the Investor Presentation is known as Reverse Roadshow. It has been gaining some popularity in the last couple of years because the investors really appreciate the tangible assessment of human inventory and products of the company.
One of the biggest advantages of a reverse roadshow is that it gives the investors an ample amount of time to discuss different aspects of the business with the senior management of the company. Unlike live roadshow where the top management is in a rush to attend too many meetings each day, in a reverse roadshow the senior management can afford to spend some good hours with the potential investors.
A typical reverse roadshow starts with investors’ brief meeting (around 30 minutes) with CXO that comprises a Q&A session, followed by the site visit that might take around 45 minutes to 2 hours. Further, a reverse roadshow also provides the perfect opportunity for the equity sales team to meet their clients for an extended period to build a stronger relationship.
Although it is important to reach out to the wider audience for prospective clients, it is equally important to maintain strong relationships with the existing investors too. Now the question is, how to build a relationship with the existing investors? This is where a Non-deal Roadshow comes into play as it helps to keep the current investors up-to-date about the company’s recent activity. In fact, the company can hold investment discussions with both current and prospective investors. However, the key difference with usual roadshow is that nothing is offered for sale and its primary focus is to:
- Offer useful information about the company
- Disseminate the company’s vision and plan for the next few years
- Apprise the investors of the company’s recent performance
Some of the advantages of a non-deal roadshow are:
- It helps in building trust among the investors as they are kept updated with all the recent activities and performance of the company.
- It helps the investors to better understand the company’s business through the informative presentations.
- It helps the company to understand what the investors expect of them and accordingly set the targets, otherwise managing the investors can be a really tricky business.
- It can help to draw more investment from the existing investors as they recognize the benefits of owning a larger share of the company.
So, by now you are well aware of all the different types of roadshows. However, conducting a roadshow is not a child’s play and can be very complicated at times. ExchangeConnect has a professional set of teams that can help you conduct a roadshow from start to the end. Get in touch today to start your roadshow preparation.