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3 Ways Facebook Changed the IPO Roadshow

Facebook's tour to meet with investors before its initial public offering was like no other IPO roadshow. Here's what you can learn from it.

by Tim Donnelly
Publication: Inc.com

May 15, 2012


The following is an excerpt from Inc.com article that quotes Finance Professor Tim Loughran about Facebook meeting with investors prior to its initial public offering. To read the entire article visit: 3 Ways Facebook Changed the IPO Roadshow

This wasn't your run-of-the-mill IPO roadshow, all power-suits and PowerPoint.

No, Facebook's IPO, which wrapped up this week, was less of a series of boardroom meetings and more of a traveling circus, complete with sideshows and a ringmaster, and newspaper men swarming the doors. Media coverage so far has focused on the rock-star atmosphere and has centerd the spotlight on everything from the star-seeking crowds to Facebook founder Mark Zuckerberg's deliberately slouchy clothing choices.

"It's like trying to get into a Bruce Springsteen concert," one attendee told the Boston Herald. "Usually at a roadshow, there's no security and no wait. This is unheard of."

Excerpt

But the most crucial segment in a roadshow stop is not the video: it's the question-and-answer period that follows the video and presentations. This is the big chance for underwriters to feel out the company—and to get to know the intangible essence that you can't pick up from SEC filing documents, says Timothy J. Loughran, a professor at finance at Notre Dame's Mendoza College of Business.

"What investors are trying to get is some sense of future profitability," he says. "The analogy of job interviewing is exactly right. You get them into your office and say 'This is not a good fit.'"