Timing is everything where IPOs are concerned, and no time could have been worse than April 2000, the beginning of the dotcom downfall. AutoTrader.com, a "classified" site for
dealers and individuals listing new and used cars for sale, was about to go public when the market bottomed out and its investment bankers made the wise decision to postpone the
IPO.
The decision may have been fiscally sound, but from a PR perspective, it couldn't have been worse. Access Communications, the company's PR firm, knew that pulling an IPO would
lead to the perception that the company's business structure was unstable or that the company was in financial trouble, meaning rumors of layoffs, closings or acquisitions.
The agency team had 48 hours to launch a proactive campaign targeting media, the financial community - including potential partners and investors - and employees with the
truth about the IPO postponement.
Planning for Postponement
"We had to jump into strategy and execution mode," says Colby Grimes, VP for Access. "We did a lot of meeting with the investor relations team and the internal AutoTrader execs
on how to position this, and we worked pretty much around the clock for 48 hours." That short turnaround turned out to be a good thing, however. "There wasn't a lot of time for
people to think to do something different or wait. We had to move quickly and we were able to make quick decisions," Grimes says.
AutoTrader was a stable company that did not need to raise money in poor market conditions in order to succeed. The plan of action became an aggressive, full-disclosure
outreach to target audiences, promoting that message of stability.
The team created a day-by-day plan to alert all constituents of the decision to withdraw while reinforcing the company's stability and clearly outlining intentions to re-file
an IPO when the market corrected itself.
The plan included key messages for each audience, executive talking points and a Q&A document for senior management to follow when speaking with stakeholders.
Prior to the announcement of the postponement, the Access team had AutoTrader CEO Chip Perry conduct one-on-one conference calls with financial and industry analysts to inform
them that the company was pulling the IPO. Perry encouraged them to respond favorably if contacted by the media.
One day prior to the internal announcement, AutoTrader.com execs contacted key partners to discuss the news, assured them that postponing the IPO was a strategic move and
attempted to convince them that the company was totally stable.
The day before the announcement, Access contacted a select group of three publications to downplay the news and explain the postponement. The team knew positive coverage in The
Wall Street Journal, Automotive News and The Atlanta Journal-Constitution would placate other members of the business, trade and local press, as well as other stakeholders. Pre-
briefed analysts and AutoTrader execs were on hand to discuss the issue with reporters from the three media outlets and other media requesting information.
A press release was then distributed by the investor relations firm working on the campaign, and an email blast went to additional media and analysts announcing the withdrawn
IPO.
Internal Issues
AutoTrader was especially concerned that employees would be shaken by the news and would leave the company in droves. Access developed a mandatory "fireside chat" with
executives explaining the announcement a day ahead of time to all employees. During the informal discussion, they would explain the state of the market, affirm intentions to re-
file once the market conditions brightened and reassure employees that the company was a stable place to work and no layoffs or acquisitions were on the horizon.
Results
The team managed to downplay the news and avoid negative coverage. The Wall Street Journal, The Atlanta Journal-Constitution, The Detroit News, The Washington Post and
Automotive News all covered the story from a positive angle, and 90 percent of the stories replayed the team's key messages verbatim.
Employees remained loyal with no turnover in the immediate aftermath of the announcement.
As a result of the outcome, AutoTrader increased Access' budget for 2001 by 40 percent over the previous year.
Postscript: AutoTrader still hasn't filed an IPO and now predicts it will be profitable in the third quarter of this year. Because of its pending profitability, the company now
does not foresee a need to go public.
(Contact: Colby Grimes, [email protected])
Campaign Stats
Timeframe: 48 hours in April, 2000
Budget: Access was working on a monthly budget of $50,000 for this project and other public relations efforts.
Access Team Members:
Jennifer Fellner, SVP
Colby Grimes, VP
Cori Barrett, Account Supervisor