The challenges of functioning successfully in an extended COVID-19 environment have presented many new ways of doing business. This is especially evident for events such as non-deal roadshows (NDRs).
Many companies are curious to know how best to stay visible with investors during this time, when there is little to no traveling for face-to-face meetings. In some ways, the buy side is now busier than ever with endless requests for virtual meetings, whether from public companies looking to retell their story, IPO companies holding test-the-waters meetings, or private companies looking for an initial introduction.
While a company can certainly set up these types of virtual calls by leveraging personal connections with managements, an investor relations firm, and board members, we typically suggest utilizing the relationships you have established with your investment banks. Banks have broad experience and knowledge when it comes to which accounts are currently investing in comparable companies and which investors are willing and eager to do virtual NDR meetings. It is also a great way to build that rapport with a current or potential banking partner while becoming more familiar with their team and capabilities.
Over the last several months, we have taken note of several key learnings regarding what makes an NDR most productive and efficient for the companies we work with. Below, we lay out seven considerations for executives preparing to “hit the road” — without actually traveling — to meet with the buy side.
1. Think strategically about timing. We support being visible, but there must be a balance. If you are not visible, you run the risk of not maintaining an ongoing dialogue with current investors and failing to build a healthy bench of potential new investors. Being too visible, on the other hand, could cause investor fatigue and give the impression you are less worried about running the day-to-day business than you are about meeting with Wall Street. You must land somewhere in between.
Ultimately, the timing of NDRs is most valuable when you have something important to talk about — e.g., recent data, a new program, or a change in direction that needs clarifying. Once a plan is mapped out in relation to the company’s news flow, lock in a date that works for management’s schedule and optimizes attendance. When considering timing and dates of a NDR, thoughtfully evaluate the calendar to avoid conflicts with earnings, major medical meetings, or industry conferences. Days that used to be off limits, such as Mondays and Fridays, can now be considered as options since there are no travel concerns.
2. Conduct the NDR as similar to pre-COVID style as possible. When we work on a NDR, investment banks often assume that the virtual setting allows limitless outreach, since anyone can dial into a conference call. However, our strategy has been to limit outreach to specific geographic areas. The rationale is to keep multiple parties from approaching the same accounts numerous times.
Consider this scenario: You have committed to doing two NDRS with two different investment banks within a few weeks of each other. If left open, your partners would potentially send out invitations to overlapping accounts, which might send a wrong message. We prefer to be mindful to not over ask the same accounts and suggest taking a more systematic approach by allocating geographies (including Europe) among the various banks that are involved in your NDRs.
3. Provide a target list of accounts ahead of time. We find it helpful to provide a list of accounts to target on upcoming roadshows. Typically, this includes a bucket of accounts that are current investors that likely need an update on the story, plus a bucket of investors that have not been seen recently or at all and need an introduction or reintroduction to the company. If a bank has a strong relationship with a certain account, we find it useful to ask if that relationship can be used to secure a meeting with a “hard to see” investor.
4. Group calls can be challenging, so have a plan to address the silence and to keep the conversation moving. Over the last few months, we’ve observed that while group calls with multiple investors look good on paper, they can sometimes be challenging. If you know your investors, be sure the pairing on the schedule makes sense. For example, it usually does not work to have several long-time shareholders on the same call as those that are brand new to the story. In this case, either one person tends to ask most of the questions or there is awkward silence and no one asks any questions. If the call is not a one-on-one, try to work with the NDR organizers to properly align the attendees of a meeting to optimally address the varying level of familiarity and investment style.
5. If the sponsoring bank covers your company, ask if the analyst can join a few of the investor calls. Having a covering analyst join some of the meetings (if there are no compliance restrictions) or moderate a group meeting with Q&A is an ideal way to keep the analyst involved and updated. Many times, he or she will publish a report after the NDR capturing the key takeaways, which can be an efficient means to broadcast the company’s updated message more widely. Prior to the meeting, be sure to get a list of topics from the analyst that will be addressed, so there are no surprises.
6. Prepare your messaging and practice Q&A. While most of us are conducting business from our homes, that doesn’t mean the questions or meetings will necessarily be any easier. We have seen a few companies take a more leisurely approach to NDRs than they would if they were traveling to investors’ offices. In some ways, doing back-to-back Zoom-type calls can actually be tougher, as there is not much time to download in between meetings and tweak the commentary as needed from one meeting to the next. This is all the more reason to prepare and practice ahead of time. Be sure to review investor backgrounds prior to the calls so that you know your audience, and rehearse Q&A.
7. Opt for video. Sometimes, you will be reconnecting with a portfolio manager that you have known for a long time, but other times, you will meet with new people. For the latter scenario, first impressions really do matter, which is why we recommend video, rather than just audio. Investors want to see the people who run the companies they may invest in, and seeing you can add credibility and instill a level of confidence.
As we all learn to adjust to doing things differently, finding effective solutions for communicating with current and future investors through events such as investment banking conferences, company-hosted R&D/analyst days, scientific conferences, and NDRs becomes increasingly meaningful. Competition for market share with the buy side is intense, so take advantage and make the most of your opportunities — even if they are not face-to-face.
For more insight into how these elements combine into an effective overall investor relations plan, download our eBook, “Investor Relations Primer: The Basics of an Effective Plan.”