For companies looking to go public, investor relations is more than a necessity — it can also be a way to create a competitive edge that will help you attract the right investors at the right time. Recently, advisory partner of Ernst & Young Jackie Kelly hosted an insightfult webcast on leading practices in investor relations (IR), and she wanted to share their key takeaways.
A robust IR strategy includes developing the right relationships and setting the appropriate expectations around the company and its business model through a clear, consistent and concise message. Here are five ways to develop your investor relations:
1. Make the IR strategy a foundation of your IPO planning.
Although an IR strategy should be a foundational element of planning for an IPO, the function itself can develop over time. It can be large or small, in-house or outsourced, or both. Its structure will differ based on the company, its go-to-market strategy and its timing, among other variables, said Katie Turner, Managing Director, ICR. It’s about “making sure that you’re crossing the t’s and dotting the i’s,” Katie said.
2. Deliver the message as soon as the business model is viable — but not before.
It’s okay to develop relationships early in the game, but don’t get in front of the business model, said David A. Brown, Head of Equity Capital Markets Advisory, Ernst & Young Capital Advisors, LLC. “What you don’t want to do is either present poorly or before you figure out what your track is going to be,” David said.
3. Stay focused on the right message, from start to finish.
Wall Street is not a fan of changes in messaging, said Tom Morris, Generalist Investment Analyst, Marshall Wace LLC. “I want to hear about everything,” Tom said. “I don’t want to be surprised.”
4. Get ready for the road show.
Remember that investors are buying into the management team, not just the road story: The goal is a compelling story convincingly presented. That means practice, and lots of it. If the road show team doesn’t include someone with solid presentation skills, it’s a good idea to fill that gap. The presentation itself should tell your story succinctly.
5. Once you’re on the road, be prepared for the unexpected.
Investors and analysts will come with questions, so it’s important to anticipate a conversation that moves beyond the slide deck. Know what you will answer — and won’t answer. This isn’t a good area for improvisation; you don’t want to be thinking through your strategy in real time in front of investors. “When they close the book and start to ask you questions, being prepared for those questions is critical,” David said.
Of course, even the best IR strategy will be jeopardized if the organization doesn’t hit its first-quarter numbers. Missing those numbers brings a huge loss in credibility, and repairing the damage can take years of solid execution and marketing — something to bear in mind.