Top 10 Do’s and Don’ts of European Road Shows
Management teams often believe that marketing their company in Europe would offer a fun, worthwhile trip and could diversify their shareholder base among international investors. While it can be productive, marketing abroad can be a colossal waste of time and money, if not planned thoughtfully. Having coordinated hundreds of non-deal IR road shows in Europe, here are a few tips from the team at Westwicke:
- Do leverage an existing trip to Europe to meet with investors. Our suggestion is to combine an existing trip for business purposes or a conference appearance with a few marketing meetings. The trip is long, so it makes sense to accomplish several goals while you’re already there.
- Do ask for help. Too many companies try to “set up” European meetings themselves or through their IR firms. The reality is Europe is a different animal and it’s impossible to know every key player in each market. We suggest using one of your analysts to set up the trip. Almost all investment banks have a dedicated European sales force that is much more qualified to produce a quality set of meetings. As a quick aside, don’t hire a third party to set up the trip. You will likely end up with a lackluster schedule.
- Do focus on quality vs. quantity. We believe that more isn’t necessarily better; better is better! Often, the European sales forces at these banks are so excited to get a management team in their territory that they want to extend the trip for several more days to see a number of cities. This is a bad idea for two reasons: First, the cost of travel to these secondary cities can be off the charts. Second, these meetings often have diminishing returns. Stick to the major cities and target the best accounts.
- Do insist that the salesperson attend the meetings. Salespeople play an important role in the success of these trips, as they can give valuable insight into each meeting. For example, before every meeting, make sure you get a summary about each person’s level of interest, investment style, peer ownership and any other relevant factors that can help with the discussion.
- Do maximize your time, i.e., logistics matter. As you think about the trip, recognize that many large cities are difficult to maneuver. London, for instance, is much like Manhattan. Meetings can be all over the place and, if not properly coordinated, getting to each location can leave you missing some meetings and late for others. Make sure the investment bank setting up the meetings in each city arranges a logical and efficient schedule (which is yet, another reason to ensure the salesperson attends).
- Don’t make your story too complicated. One of the tricks to successfully marketing your company in Europe is to make sure you don’t lose the audience in the first 10 minutes. To be clear, we are not suggesting that you “dumb down” your presentation; instead, we suggest that you avoid going into excruciating detail in the initial meeting. Most of the folks you will meet with are generalists, not healthcare specialists.
- Don’t go if you are too small. If you are a public company with a market cap of less than $500 million the cost/benefit analysis does not favor international marketing. That said, brand recognition can raise the quality of the meetings, despite your company’s market cap size.
- Don’t be fooled by the size of their assets. While you will meet with accounts that primarily invest in the U.S., you will also meet with generalist international investors. These investors take a global perspective and only allocate a small portion of their assets to the U.S. and an even smaller portion specifically to U.S. healthcare companies. A $2 billion global fund may have less than $100 million to invest in U.S. healthcare.
- Don’t expect a lot of transparency. European funds are not held to the same disclosure policies, such as quarterly 13F filings, as U.S. funds. In that respect, it makes it more challenging to gauge the returns on an international road show. Companies should rely on feedback from the sponsoring firm and an uptick of international information requests to measure the impact.
- Don’t spend every summer in Europe. It’s really not necessary to market in Europe every year. It’s a great practice to stay in front of the European investors that you previously met and to keep them current on your story. Many of these investors come to the U.S. so we suggest that you proactively target these accounts at investor conferences while they are here.
In today’s highly globalized world, international markets are significantly more accessible than they once were and meeting with those investors is now a critical piece of any investor relations strategy. While the point of these trips will be to communicate with potential investors, culinary experiences are held in high regard in Europe and the opportunity to meet several investors over a meal should be seized. The tips discussed above can help you make the most of your next jaunt across the pond.
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