Invesment Banking Series: Roadshows

Investment Banking Series

Post 7 Roadshows

1. What is it anyway?

Roadshow is basically marketing of the firm issuing securities to the potential investors. CFO, CEO and a few more people from senior managers hit the road and make presentations to all kind of investors in both group and one-to-one meetings.

The presentation's contents are typically heavily curated by investment bankers to make sure that the equity story is as smooth and persuasive as possible, and they show and tell only the positive sides of their business. There would be an explanation of the existing business, and the expansion plans that will be financed by the proceeds from fund-raising.

It is actually also a good opportunity for junior bankers to meet the company that they spend many days and nights to make look good in the pitch book. And the savvy ones would make good use of it to connect with the CEOs and CFOs that in the future may benefit from their investment banking services.

2. Investor meetings, big and small

Investor meetings can be largely divided into two types: group and one-to-ones. They tend to be different in both their setup and dynamics.

Group Meetings

These would have buy-side analysts, institutional investors such as banks and insurance companies, and an occasional hedge fund manager as the audience. It is also common to schedule it around lunch to use the extra appeal of free food to boost participation.

In Japan there are some extra twists to that. There would typically be one person who moderates and one who is more senior and sort of a keynote speaker, both typically from the bank organizing the roadshow. In my frank opinion, they add zero value, but such are the customs...

Occasionally, Sales cannot bring enough people into the room. And this is where sakura comes in handy. Not to be confused with the beautiful blossoms of cherry trees, this jargon refers to the fake investors who are typically junior bank employees taken from their desks to fill the empty seats.

One-to-one Meetings

Strategic investors who may potentially be looking for a business tie-up and dish out a significant amount of money for a stake, one-to-one meetings is the norm. Here they can discuss potentially sensitive matters with no fear of being overheard by competitors.

Fund managers who specialise in a certain region or industry and are highly likely to invest into a new company in their investment universe also often get the privilege of interrogating top management for a whole hour. Not that such meeting get particularly confrontational, but it is their job to see the through the smooth equity story and see what the downside is, so they tend to be thorough.

3. Lessons

If you a a junior investment banker aspiring to escape the gruelling day-and-night work of pitchbook writing, you need to get your own clients. Roadshow is a great way to get out there and meet industry participants and better understand the interest of your potential clients as well as the different investors who follow them.

So if you get a chance, definitely go on the roadshow. Raise your hand to volunteer even. Because even if you don't make friends with the CEO, you will be out of your office cage accompanying some senior people, and looking the way people imagine investor bankers. Expensive suit, sharp tie, and radiating confidence. Well, if you got any sleep previous night of course...

Links to other posts in the investment banking series:
Post 1: Series Introduction
Post 2: Deal from Sourcing to Completion
Post 3: Pitch Books
Post 4: Valuation, Part 1
Post 5: Valuation, Part 2
Post 6: Equity Story

Postscript

I finished this post 10 years after I had written the first draft. I have since long left investment banking. Two years of sleepless nights, getting bullied by my many bosses and not getting anywhere were enough to call it quits. I still work in the financial industry, but in the job where both the egos and the salaries are smaller. And I am pretty sure that if I decided to stay back then, I might have had much more money, but I wouldn't have my wonderful family...

This concludes, with a great delay, my Investment Banking Series.