4 Questions to Ask When Building Your Investor Relations Program

By Paul | Posted Oct 20, 2008 | 0 Comment(s) | Filed in: Business

This is a guest post by Terry Taylor, a communications professional with more than 30 years of experience in financial services. Terry holds a master's degree in economics from Case Western Reserve University, and his expertise includes investment management marketing, investor relations and financial communications.

One of the most important things a publicly traded company has to address is how it communicates with the investment community. And it doesn’t matter whether you’re a small, growing firm or an established industry leader – you have the same needs to access capital markets, maximize shareholder value and keep your owners happy.

The challenge is putting structure around what you’re doing to get the most for your efforts. Every investor relations program should address four questions:

1. Where is my company now?
2. Where do I want my company to be?
3. What do I do to get it there?
4. Once launched, then what?
   

1) Where is my company now?

Most of us want to start with the second question and speak to the grand strategy. But a successful investor relations framework demands that you think through the environment in which your company is operating and how it’s perceived today, asking yourself:

• Where is my company now and what is its outlook?
• How is my industry doing within the context of the economy?
• How do I stack up versus my peers?
• Which analysts cover my stock? Which ones cover my peers?
• How much of my stock is owned by institutions?
• Which companies are the best regarded in the investment community and why?
  

2) Where do I want my company to be?

How do you define success? Just like any other business initiative, your investor relations program has to have clearly defined targets. For example:

• Targeted total return versus a market benchmark and a peer universe.
• Increased liquidity of company securities.
• Levels of institutional ownership.
• Expand investment analyst coverage.
  

Make sure your objectives are reasonable and attainable.

3) What do I do to get there?

Next comes the creation of a communications program.

For each objective you set, there should be a defined approach and set of deliverables. If your objective is to increase institutional share ownership, your approach could involve increasing security analyst coverage and portfolio manager interest. Deliverables would include presenting at institutional investor conferences, calling on analysts and portfolio managers with your management team, creating and distributing a quarterly company fact sheet and strengthening your web site to make investor material available.

Be clear on accountability for each deliverable. It’s true that many tasks are shared, but someone has to be on the hook.

4) Once launched, now what?

Now that the investor relations program is under way, what do you do?

• Track your results but be patient. Some of your actions will take time to see outcomes.
• Listen to the market’s feedback and decide if your program needs to adapting.
• Remember: The ability to achieve some of your objectives can’t be divorced from the real world. If the company isn’t doing well or doesn’t inspire confidence, no investor relations program in the world is going to fix that.
  

Other questions, including how to integrate investor relations with public affairs, have to be answered too. But you’ll be well on your way to establishing an effective program if you build using a thoughtful step-by-step process.