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| Roadshow |
In the process of an IPO, or seasoned equity or bond issue, the roadshow is the moment when the initiative is presented to an audience of institutional investors; the aim is to draw attention to and excite interest in the security offering that will follow (Benveniste and Spindt, 1989; Schulte and Spencer, 2000).
A roadshow (also known as a "dog and pony show") is made up of a series of meetings in which the intermediary or intermediaries that handle the issue (book-runners) introduce the company’s management team and its development projects and business plan to a more or less limited number of institutional investors, portfolio managers, and financial analysts. The aim is to facilitate placement of the securities and/or increase the liquidity of the shares already traded on the stock market.
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Since the roadshow depends on the size of the offering, the type of issuer, the profile of target investors, the pre-chosen market, and last but not the least the actual interest shown in initial meetings, it is not possible to determine either the length of this phase (generally it runs from a few days to a few weeks) or the cost.
The roadshow is important for setting the share price for the IPO, because the intermediaries that follow the company can weigh their opinions against those of the people who will deem the initiative a success or a failure. In other words, intermediaries can come up with an of er price that is more in line with the expectations of the public, as observed during the various meetings.
