Over the last decade, various regulatory adjustments have dramatically changed the buy-side/sell-side scenario and how companies interact with both sides of The Street. In 2000, the SEC adopted Regulation FD, which aims to promote the full and fair disclosure of information by publicly traded companies. Two years later, Sarbanes-Oxley mandated reforms to enhance corporate transparency and reduce conflicts of interest among securities analysts. Crucially, today, management teams need to provide the same information to both sell- and buy-side analysts.
The following are a few tips to help you better manage your analyst relationships:
- Keep the talking points consistent between the sell-side and buy-side analysts. Regulation FD mandates that you treat both sides equally. Be straightforward, transparent and candid with both. Shareholders that receive different information from the analysts will take this as a red flag.
- Appreciate the nuances between buy- and sell-side analysts. It’s important to understand that buy- and sell-side analysts have different jobs and play different roles. For instance, the sell-side analyst needs to have a price target over the next year. The buy-side analyst may create a target price over the next three years. As a result, each may interpret the exact same information differently.
- Follow up. For years we have heard from both sides of The Street that management teams say “we will get back to you on that”… and then don’t. It’s important to write the question down and to circle back after your discussion or meeting in a timely fashion.
At Westwicke, we recognize that the landscape of buy- and sell-side analyst interactions is constantly changing. We are always thinking about how best to communicate with both sides, and are happy to share our views. Please 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.
To hear directly from select sell-side analysts you can download free recording of our Wall Street Revealed webinar: “How Does the Sell-Side Really Look at Companies?” View it now.