Maintaining a vibrant and compelling shareholder base is one of your management team’s most important responsibilities. Your current major investors need to feel that you know them and are available to them when necessary. Yet you must also be thinking constantly about attracting new investors to your company.
Companies ask us frequently for ideas on how they can broaden their investor base, so I polled our team for some of their best responses.
Consider attending non-healthcare conferences. Attend a growth conference aimed at companies of your size that offers a track record of good and varied attendance from investors beyond just the healthcare sector. Casting a wider net can never be a bad thing.
Try attracting new research coverage. Depending upon whom you are working with currently, adding a new analyst to cover your stock may add a whole new audience of investors you have never met before. Yes, many investors know all of the same analysts but there are examples where strong new research coverage also adds the benefit of bringing new investors to your story.
Consider whether you’re missing any key investors. Compare the top 20 investors of your primary competitors with your own top 20 to get a sense of whether there are any major investors that you haven’t reached. Then review what you’ve done already to attract these investors. Have you met with them? If these are individuals you’ve tried unsuccessfully to attract, then keep tracking them and look for new opportunities. But if these are investors who just haven’t heard your story, then start doing some outreach immediately.
Travel more broadly. When you go on non-deal road shows, make sure you don’t hit the same places over and over. There are investors all over the world, so consider going to new locations, including international destinations. Also, have your road shows sponsored by a variety of investment banks, as each bank may have different institutional relationships.
Go to Europe. Attending a healthcare focused investor conference in Europe is a great way to gain exposure to those investors. A conference like the Jefferies Healthcare Conference in London — one of the largest healthcare conferences in Europe — creates a critical mass of investors that makes it worth the trip for U.S. companies.
Introduce new executives to the process. Buy-side investors are accustomed to meeting with CEOs and CFOs. I find that for an investor who is on the fence there is value to mix up the dialogue. Meeting with other members of the senior management team, like the Chief Medical Office or the VP of Commercial Operations, can shed new light on a story and how a company is thinking strategically. It could make a difference as to whether or not a potential investor becomes a shareholder.
Build relationships with a diverse group of investment banks. Bulge bracket, growth-oriented, boutique, high-net-worth and healthcare specialty investment banks have different types of customers that could be owners of your shares. Their research, investment banking, and equity capital market coverage will assure that a vast array of potential investors is being exposed to your company and strategy. The wider the net you cast, the broader the investor base that you can attract.
Pay attention to every investor. Your investment banking partners do a good job marketing and selling your story but they also want to get you in front of their better commission-paying clients. There are plenty of good long term investors that fall below the banks’ radar screen because of low turnover and smaller trading commissions paid. Make every effort to get in front of these investors. They can be great long term partners.
When you’re trying to broaden your investor base, it can be easy to fall into a rut of doing what you’ve always done — attending the same conferences, delivering the same presentations, and managing your non-deal road shows in the same way.
Sometimes, you have to get creative. For more help or a deeper conversation, reach out.