Legal Definitions - roadshow

A roadshow is a series of presentations given by the management of a company that is planning to sell its securities (like stocks or bonds) to the public for the first time, or to issue new securities. The primary goal of a roadshow is to generate interest and persuade potential investors to buy these securities.

These presentations typically occur during a specific period after the company has formally filed its registration documents with the Securities and Exchange Commission (SEC), but before the SEC has officially approved the offering. This timeframe is often referred to as the "waiting period." During a roadshow, company executives explain their business operations, financial performance, future plans, and the details of the securities being offered. They also provide an opportunity for potential investors to ask questions. Roadshows can take various forms, including in-person meetings, telephone conferences, or, increasingly, virtual presentations.

Here are a few examples to illustrate how roadshows work:

• Example 1: A Tech Startup's Initial Public Offering (IPO)

  Imagine "Quantum Leap Software," a promising tech startup, decides to go public by offering its shares for the first time. Before the SEC officially approves their stock offering, Quantum Leap's CEO and CFO embark on a series of virtual meetings with large institutional investors, such as mutual funds and pension funds. During these presentations, they showcase their innovative software products, explain their market strategy, project future growth, and detail how the funds from the IPO will be used. They answer tough questions about profitability and competition.

  This illustrates a roadshow because Quantum Leap's management is actively marketing their new stock (securities) to potential investors during the legally defined "waiting period" of their public offering, aiming to build demand for their shares.

• Example 2: A Manufacturing Company Issuing New Corporate Bonds

  "Global Dynamics Inc.," a well-established manufacturing company, needs to raise a significant amount of capital to build a new, state-of-the-art factory. Instead of issuing new stock, they decide to offer corporate bonds to the public. Their finance director and treasurer conduct a series of in-person meetings in major financial hubs with representatives from insurance companies and large investment firms. They present Global Dynamics' strong financial health, explain the low-risk nature of their bonds, and outline the attractive interest rates and repayment schedule.

  This is a roadshow because Global Dynamics' executives are presenting to potential investors to market their new bonds (another type of security) as part of a public offering, explaining the investment opportunity and the company's stability.

• Example 3: A Biotechnology Firm Seeking Investment for Clinical Trials

  "BioCure Innovations," a biotechnology company, is developing a groundbreaking new drug and needs substantial funding to complete its final clinical trials and bring the drug to market. They decide to conduct an IPO. The company's CEO and lead scientist hold a series of online webinars and private virtual meetings with specialized healthcare investment funds and wealthy individual investors. They detail the scientific breakthroughs, the potential market size for their drug, the regulatory pathway, and the expertise of their research team, all while emphasizing the long-term growth potential of their stock.

  This demonstrates a roadshow as BioCure's management is directly engaging with potential investors to promote their stock offering, providing detailed information about their business and prospects during the critical pre-approval phase of their public offering.