Be realistic. As much as you may want certain investors to hold your shares, a growth investor isn't going to be interested in the status
of your turnaround, just as the momentum investor isn't going to be compelled to invest for the duration of a long-term strategic
The identification of the ideal target begins with a realistic evaluation of the investment outlook for your company. Develop
a clear understanding of the financial benefits of investing in your company and ensure that presentations and investor materials
communicate those benefits.
How much time do they have for me? Investors may have eight meetings a day, six of them involving competing investment ideas. Managers also have to stay on top
of their existing investments, identify new ideas, and deal with the internal demands of their firm. The face-to-face meeting
is a critical event that requires on-point communications that generate enough interest to entice the investor to want to
look deeper. Meetings with existing holders should be viewed as critical "check-ups" in which investors are analyzing the
health of their investments.
With mutual funds and large portfolios holding dozens and occasionally hundreds of positions, and the potential universe of
investments often many times larger, the adage that the most important impression is the first impression has never been more
How do I maximize communication? From SEC filings to the chat room, the spectrum of information sources and communication channels continues to grow. The
challenge is to maximize efficiency and maintain a consistent company message while monitoring third-party communications
There is no better tool than transparency. If your company communicates openly, the opportunity for misinterpretation or misinformation
is greatly minimized, and you will spend significantly less time reacting to rumors and conjecture. The companies that struggle
the most with disclosure regulations are the ones that do not have a practice of open communication.
Written communications are an important basis from which to build all other communications. Ensure that they are available
through your website, and archive your conference calls for at least two years. Announce publicly when you will be participating
in an investment conference or other well-attended event where you will be speaking about the financial aspects of the company.
Have replays available of these activities for those who couldn't listen live. Establish a disclosure committee that meets
to discuss the key communication points regarding the company and current industry issues. Have appointed spokespersons who
are briefed regularly regarding the company position on important topics. It's also fine to say, "I'll get back to you on
that question," but just be sure you do.
How do I measure results? People often think you can't measure investor relations or that the measurement is stock price performance, but neither is
true. Devoting a significant amount of time to investor relations activities warrants development of a measurement program.
As with any part of the company, the key to effective measurement is good goal setting. For example, you can establish a goal
for the number of days you will allocate to investor meetings and how many meetings you want to conduct. Target the number
of conferences you will attend. Analyze your current shareholder base and honestly assess its appropriateness relative to
the financial outlook for the company.
When targeting potential investors, every minute needs to be maximized— especially because you are diverting your attention
from managing operations. If you're going to do it, do it right, so valuable time isn't squandered. Regardless of how the
sell side evolves, senior executives taking a more active role in their buy-side activities will benefit.