Roadshow
Candlefocus EditorThe purpose of a roadshow is to bridge the gap between the issuing company and potential investors, allowing the issuing company the ability to explain and showcase the offering, its benefits and its risks. It can also provide the investors with a better understanding of the company, its future potential and the value of the offering.
The inclusion of the roadshow in modern IPO processes has been particularly beneficial for emerging companies and tech startups, as it enables them to directly engage with potential investors and helps explain their offering and its potential.
One of the most notable roadshows in recent years was that of Chinese e-commerce giant Alibaba prior to its 2014 Initial Offering on the New York Stock Exchange. Following the success of the roadshow, the company achieved the largest ever U.S. technology IPO, with a total capital raise of $21.8 billion. This event is widely attributed to the high level of enthusiasm that had been generated by the promoters during the roadshow and the subsequent high demand for the offering.
At the concluding stage of the roadshow, the details of the IPO are finalized. This includes the number of shares to be offered, the duration of the period of sale and the price. Not all roadshows lead to IPOs though, with companies sometimes using roadshows to solicit private investment in the absence of any public offering.
All in all, a roadshow is an important tool used by companies, investment banks and financial advisors to create interest in a company’s initial public offering, enabling potential investors to gain a better understanding of an opportunity and its risks. With their success in launching new companies and helping startups get off the ground, roadshows are now a mainstay in the world of corporate financial transactions.