There’s something in the air so far this year that has undoubtedly put a crunch on deals, leading to a lot of quacking but little action. We’ve met with a lot of companies calling to prepare for a major financial milestone before eventually shrinking back to baseline. Nine months later, many of those same companies have returned with even more pressing communications needs as those milestones finally come to fruition!
It’s not surprising if you’re following the trends.
The normal $27 billion IPO market bottomed out this year— The Wall Street Journal reports U.S. companies only raised $9.1 billion through IPOs thus far in 2023.
M&A activity has fared a little better despite a few highly visible deals. Amid higher interest rates, geopolitical issues and recession concerns globally, deal volume for M&A dropped to $1.03 trillion year to date, down from 2021’s record $3.83 trillion, according to Bloomberg. Crunchbase shows that M&A is having the slowest year ever since 2013. Just 429 venture-backed U.S. startups made M&A deals in the first half of 2023, down from 1,700 in 2021 and 1,100 in 2022.
Change, nevertheless, is in the air, and it’s in moments like these that I find myself more interested than usual in the myriad narrative and messaging shifts I see among companies ramping back up.
One riveting deal is Savvy Gaming Group’s acquisition of gaming company Scopely for an eye-catching $4.9 billion as reported in PocketGamer. How did this happen? First, Scopely played it smart with its acquisitions of Disney FoxNet Games and Sony Picture’s GSN Games, making them a powerhouse target for acquisition.
Savvy’s messaging similarly speaks volumes. It highlights the enviable and hard-earned brand loyalty—characterized in large part by a deeply engaged player community—that was inevitably a factor in the purchasing decision. Scopely has done an outstanding job building and fostering a community and, more importantly, showcasing it to media, influencers and other stakeholders. It’s a clear demonstration of how well-crafted messaging and narratives can lead to something as tangible and impactful as an acquisition.
Savvy Games Group CEO Brian Ward gets it. “Scopely is one of the fastest-growing games companies today, and we have long admired their ability to build loyal, engaged player communities,” he said in a press release. “At Savvy Games Group, our mission is to invest in—and grow—the global games community by inviting the best minds to join us.”
Easing inflation is boosting the stock market, which has been warming up for expected IPOs from companies such as Arm, Klaviyo, Turo, Birkenstock and Instacart.
These types of financial transactions require a ton of PR and brand narrative work. The key is to make the messaging make sense to the most crucial stakeholders and for it to also be repeatable and defendable.
I’ll give you an example. Birkenstock’s expected IPO is driving a ton of buzz and also questions about why a more-than-400-year-old company would choose an IPO at this stage. What are they trying to say? Their leadership knows financial liquidity and validation on a public U.S. exchange will allow the company to expand into India and China. And that is a hot deal.
Meanwhile, Instacart has pivoted in messaging and returned to the IPO ring after shelving its initial plans back in 2022. Back then, Instacart’s message leaned heavily on a surging “gig economy,” the post-pandemic convenience of fresh groceries delivered to your door, and a monthly subscription fee as an attractive revenue model. Yet even then, that messaging couldn’t handle the skyrocketing inflation or the unstable global economy further fueled by the war in Ukraine. Now, with the IPO back on, the latest edition of the brand’s messaging hones in on the savvy use of advanced technology applications such as electronic shelf tags, mobile self-checkout and AI-powered search, which we know is more machine learning than “intelligence.”
As the foundation for company communications, messaging—above all—needs to be tested and proven. Questionable claims—whether related to revenue and growth, audiences, market need and product fit or any other business component—destroy credibility. This makes the work in building a compelling narrative essential. You only get one chance to make a good first impression, as they say.
Once messaging is in place, the plan takes flight and grows. Taking a company public through an IPO is a complex and highly regulated endeavor that requires careful planning and execution. Messaging plays a critical role in positioning a company for a successful IPO for several reasons:
Building investor confidence
- Communicate a clear value proposition: Messaging articulates the company’s value proposition in a way that potential investors clearly understand and value.
- Transparency: Effective messaging can help set clear expectations about the company’s business model, growth prospects and potential risk factors, all of which play a part in reducing uncertainty.
- Credibility: Consistent and clear messaging helps establish the company’s credibility in the market, which is often a significant factor in attracting investors.
Market Positioning
- Differentiation: Messaging needs to articulate and demonstrate a market position that shows true differentiation and can withstand due diligence. It needs to be developed and supported with tangible examples that show your business and validate customer engagement, revenue generation and future earning potential.
- Target audience: Tailored messaging can help reach exactly who investors want to attract, no matter if they are institutional investors, retail investors or a mix of both.
Regulatory compliance
- Consistency: Regulatory bodies such as the Securities and Exchange Commission in the United States require that all information disclosed to investors be consistent across all platforms and mediums. Well-crafted messaging ensures that the company speaks with one voice.
- Disclosure: Sending the right messaging ensures you keep everyone informed with all necessary disclosures. That means you have a reduced risk of legal complications down the line.
Media and public relations
- Media coverage: If your message is powerful, you will draw the attention of the media which can, in turn, attract more investors and additional value.
- Crisis management: No one wants any negative media attention or any bad events, but they do happen. A well-prepared messaging strategy helps you manage the situation more effectively, and that is some extra insurance against damage during the IPO.
Employee morale and engagement
- Internal communications: Employees are more likely to stay motivated and focused if they have had insight into the company’s vision and how they as well as the IPO fit into that vision. This internal messaging is often overlooked but crucial for a successful listing.
Timing
- Market readiness: This is critical to your IPO plan. You need effective messaging to gauge and build market readiness. Use this prep time to get all necessary feedback and prep to give your IPO timeline the attention it needs for maximum impact.
Fundamentals
- Financial storytelling: Messaging helps translate complex financial metrics and jargon into a compelling and easily understood story for a broader audience. That narrative then makes the company more accessible and attractive to potential investors.
The bottom line? Effective messaging gives your company a greater perception of the risk and value associated with an IPO, boosting the chances for success.
