IR Foundations

I was recently on a conference call to benchmark investor relations practices.  The team was highly prepared with several insightful questions surrounding investor communication and targeting strategies and C-suite involvement.  The conversation recalled an old graphic I’ve used to explain what IR does.

Temple of IRSome specialized knowledge is required to effectively execute IR strategies.  For example, to communicate with investors you must understand financial reporting, investor information needs and the metrics that effect valuation.  Targeting/engagement requires an understanding of financial markets, trading and investor behaviors and styles.  And, of course, knowledge of the regulatory environment affecting investor communications is essential.

After reviewing these foundational ideas, the discussion turned to questions like:

  • How much time should the CEO and CFO spend with investors on calls, at conferences and one-on-one meetings?
  • How do you prioritize who does what and when?
  • How visible should other members of senior management be in investor interactions?

There’s no one-size-fits-all solution.  Much depends on company size, industry and performance, but a general rule of thumb is CEOs should allocate roughly 15% of their time to engaging with investors; CFOs somewhat more.  This works when things are generally going well for a company and its industry or sector.  However, CEOs/CFOs at smaller companies or those going through challenging or transformational times may need to allocate more time.

As for which investors the C-suite should meet, consideration should be given to current and/or potential ownership, fit (investor style) and sentiment (is investor supportive or critical?).  Regarding venue, calls or meetings at corporate office are efficient uses of CEO/CFO time; one-on-one roadshow meetings are often highly effective while presentations at conferences are good if you need to generate interest with a larger audience or broadly deliver key messages.

Exposing other members of senior management (such as the COO, Division Presidents, etc.) is nearly always good in my view.  First, it exposes them to investor thinking which may help sharpen future strategic decisions.  Second, it can reassure investors that the “right people are on the bus” running the business.  Finally, it provides IR and C-suite some flexibility and optionality when planning for investor interactions.

As much as I may have helped them, the benchmarking team, through their insightful questions, were well on their way to creating an effective investor relations program.  It was an honor to help them.  What suggestions would you have given them?
Lisa Ciota
President/Founder
Lead-IR Advisors, Inc.
November 2017

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