Good Investor Relations Adds Value

Today’s enormously competitive marketplace requires that an unknown company use high-performance strategies to enter the enviable ranks of the actively traded, highly capitalized, nationally recognized, fairly market-valued company. Three things vital to success are: excellent management, a sound Business Plan, and money in the bank. However, these are, by themselves, not quite enough. What chance does a company have if the investing public doesn't even know it exists? How long can a relatively unknown company succeed in the public markets? How does a company become a household name? What forces can be put in place to help ensure success?

There is one secret I can let you in on immediately: top-notch presentation strategies often spell the difference between failure and ongoing success.

Since I founded IRG, our team has specialized in uncovering fresh, distinctive approaches to market to those who can make the crucial difference for the lesser-known publicly traded company: the analysts, institutions, fund managers, market-makers, brokers, high-net-worth and individual investors, as well as the appropriate media sources.

Like it or not, often despite inside or outside investment counsel, the public perception of top management (you!) and your developing corporate program will determine whether or not your company ends up in more portfolios.

As the officer of a publicly traded company you are required to have an IR program, whether in-house or through an outside firm. You need such a program in order to:

Not everyone considers the company as the best source of information about itself. Some investors rely strictly on quantitative or technical analysis to determine where they will invest, although such investors are in the minority. Most do see company management as the essential source of information. Many money managers would never even consider making an investment without first “touching and feeling” management in a one-on-one meeting. These meetings allow the investor to evaluate such intangibles as the personalities, honesty and integrity of management, and its perceived ability to accomplish the tasks at hand, think, act, and progress in accordance with the company’s mission.

While market capitalization is a measure of progress, or the perception of progress, the stock price itself can be considered the company’s scorecard. I hear this statement all the time: “My stock is undervalued.” This is often the cry of a weak company and a direct result of the non-delivery of performance promises. However, it can also be the unfortunate consequence of a good company failing to institute a strong IR program.

A company must spend the necessary time to ensure the investing community knows of its existence — and I am not talking about putting out the occasional press release. Let’s assume that a company’s management has been delivering, and that there is a good tale to tell. Why spend time “singing in the shower?” The shower is warm and safe, but the reward is on stage, in front of a live audience.

Too often, companies fail to put sufficient thought, time and effort into their messages and strategies. Financial releases are rushed out, poorly written and ill-timed. Conference calls are off-the-cuff. Presentations lack formality. Crisis management is not planned and addressed prior to an unanticipated crisis. Are any or all of these factors contributing to the stagnation or lowering of your stock price? They assuredly will be if you have not carefully considered how to best present your story.

Do you currently want a higher valuation? Of course you do, since the higher the valuation the less diluted the future rounds of fundraising, and the wider the circle of possible investors. The higher the valuation, the greater the opportunities for making deals. The negatives of a lower valuation are obvious. What does all this mean to you? If you aspire to a place in the big leagues you need a well-thought-out, progressive, pro-active IR program. You need it today, tomorrow and every day that you exist as a publicly traded company.