It may seem a bit early to start creating an investor relations plan for the coming year, but considering there are several major external factors primed to drive structural change and market volatility, it’s critical to start planning now. After all, there is a major U.S. election in November 2020, a recent inversion in the yield curve that may be a predictor of an approaching economic slowdown, an ongoing trade war, and plans for investor conferences organized by corporate access teams at major buy-side institutions that cut out the investment banks.
A good place to begin is an honest assessment of your IR plan for the current year. What panned out as planned? Did you achieve your goals for new institutional holders? Did you alter any misunderstood points in your investor proposition to increase buy-in from institutional investors? Are you on track to hit your targets for non-deal road shows and one-on-one meetings with institutions? Did you meet or exceed what you told the Street?
Answers to these questions will shape your planning and goals for 2020, but here are some additional key areas to consider.
- Address any misperceptions. Full-blown investor perception surveys (or even simply asking informal questions, such as, “Hey, what did you think about our recent acquisition?” to a few key investors) can alert you to whether or not your story is being interpreted in line with your goals. If there is a misperception or lack of understanding of any aspect of your business, it needs head-on attention. A lack of understanding can lead to confused investors, which may depress your valuation and curtail your ability to raise the additional cash you need to grow and prosper.
- Sync your financing needs with your IR plan. The IR plan must include the timing for key milestones that influence valuation. Many companies time their capital raises to take advantage of the rising share price that can result from achieving certain milestones, such as positive clinical trial results, a favorable regulatory decision, or evidence that a struggling business unit has turned the corner and is now on track to meet stated growth objectives. Keep an ongoing record of your investor interactions from conference calls and one-on-ones, as this information will help to form the target list of potential participants in a financing.
- Lay out the year on an IR calendar. Your calendar should contain key corporate events such as board meetings, financial results plus prep time, important industry trade shows or medical meetings, quiet periods, and national and religious holidays. This will help you zero in on the open windows available for strategic IR activities and initiatives. A non-deal road show right after the release of quarterly financial results or a clinical data presentation at a key medical meeting can reinforce the messaging of those events and provide an opportunity to answer any questions that investors may have. It also provides new content for discussion, and that helps secure face time with the buy side.
- Establish goals that can be met and measured. As part of the planning process, establish clear goals that will allow you to achieve what is important to your company. Do you want to attract new investors or additional sell-side coverage? Are there new investor conferences you want to participate in, or geographic regions where you lack shareholders? Maybe it’s time to increase your interactions with investors based outside the U.S. Strive to strike the right balance: You shouldn’t be overly promotional, but you also shouldn’t go in the opposite direction and appear to be inaccessible. All of these factors can be addressed in the planning process and evaluated periodically throughout the year. Adjustments may be needed based on changing market conditions.
- What about the big IR projects? Maybe this year is the time to tackle those big projects that involve buy-in from and participation of the broader management team. For example, maybe it’s time to renovate the company website. Websites should be overhauled about every three years, or more often if there has been a major acquisition and/or strategy change for the company. The same goes for the corporate presentation. Most companies do a refresh at least annually along with quarterly updates, but maybe a completely new approach is warranted.
Or, maybe you would like to host a comprehensive investor day that involves a site visit or plant tour. Investor days provide a chance for management to conduct a deep dive into the business and present a level of detail not possible during quarterly calls or conference presentations. Hosting the event should be driven by new content that needs to be showcased and explained, not by the calendar or the perception that it should be an annual occurrence. If you don’t have something new to talk about, don’t waste investors’ time providing them with information they already know.
Any of these projects require at least several months of planning in order to see optimal results, so be ready for the process.
Keep these tips top of mind as you strategically plan your IR activities and goals for 2020. But remember, changing capital markets conditions and volatility may dictate alterations and warrant changes in order to achieve your IR goals. Adopting a flexible and nimble approach will help you get there. For more in-depth information on your IR strategy, download the eBook, Insider’s Guide to Investor Relations.