If it seems to you that there is an investment banking conference every week, you’re just about right. Investment banks routinely hold investor conferences that tend to focus on certain industries (like healthcare or technology). A few Wall Street firms also hold what I’d call “best idea” conferences, which include representative companies from different industries.
Attending a conference can be a valuable part of your investor relations strategy. It’s a great way to get more investors to know your company, and to make vital business connections. But, if you have, say, 15 analysts covering your stock, and each one hosts a conference, that can mean you’re getting invited to 15+ conferences a year. How can you possibly accept every one of these invitations?
Before deciding “yea” or “nay” on attending upcoming conferences, it’s important to understand why they’re held. Decades ago, Wall Street’s equity divisions made money primarily by underwriting stock offerings and trading stocks. As institutional commissions have shrunk, trading has become much less profitable. However, while the buy side is no longer paying as much for trading execution or research services, buy side firms and analysts will pay for access to management. Therefore, Wall Street has strong incentives to arrange venues where they can introduce companies to investors.
It is important that management teams understand Wall Street’s incentive structure as you evaluate the invitations that you get. You should appreciate the time and effort that sell-side research analysts put into covering your company and try to find a way to recognize these efforts. However, a conference is not the only way this can happen, and investment banks and analysts often are indifferent to whether you participate in a conference or a non-deal road show.
How do you efficiently plan a conference schedule?
- At the start of the year, have a strategic plan in place for your investor relations activities, including how much time you’ll spend on the road at conferences, non-deal road shows, and direct meetings with investors.
- Maintain strong relationships with analysts already covering your company. Their conferences should get top priority.
- Look for a geographic mix. A New York-based conference means more East Coast and New York-centric attendees while another conference being held in Las Vegas may garner more investors from the West Coast. If you’re considering attending your third New York-based conference in two months, it’s probably okay to skip it.
- If you’ve still got too many invitations, consider alternatives. For example, offer two days of non-deal marketing in a geographically targeted region, or some other meeting venue between your management team and investors.
- Be strategic. Don’t just attend conferences to look busy, and avoid the potential to be over-exposed. Always ask, “Does this conference give us access to any new investors we’ve never met, or current investors who don’t attend other conferences?”
Strategic planning for conferences is especially important for smaller companies. Because you have fewer resources, you will want to have more analysts covering your stock, and will be tempted to say “yes” to every invitation.
At Westwicke, we help our clients evaluate the right mix of conferences and determine the plan that works best for your analysts, your company and your business plan. Contact us for more strategic information that can help with your IR decision-making, and sign up for our newsletter to learn more about this and other IR-related topics.