Your to-do list for sell-side success
It’s becoming increasingly difficult to engage with the sell side, especially in today’s volatile financial landscape. IR teams have to strengthen these relationships with an industry that has a slew of unending problems that have no resolution in sight.
Market turbulence affects everyone. As we’ve all seen, not even Wall Street is immune to the uncertain macro environment. While the sell side faces adversity, especially the more prominent firms covering 30-plus names with minimal resources, the days of five analysts per team are a thing of the past.
These days, smaller teams with one lead analyst and one junior analyst covering multiple sectors are the norm, as seasoned analysts continue to be laid off in successive rounds of corporate ‘restructuring’.
In some cases, analysts are covering more than 40 companies and – consequently – their workload becomes detrimental to the quality and quantity of their analyses.
Ultimately, IR professionals need to stay up to date with the latest developments as the speed at which data and markets move increases.
Networking with analysts and shareholdersLet’s face it: deciding how to attract new sell-side followers or maintain relationships with existing clients is challenging in these unpredictable times. The sell side is essentially an extension of the IR department, meaning it has the same mission of relaying a company’s performance to engage current shareholders and attract prospects.
IROs should carry out research to pave the way for effective engagement. Communicate with analysts and their corporate access team to assess their marketing strengths and decide the best path forward. Then develop a list of targeted accounts: the companies that currently own you, used to hold you, don’t own you but have spoken with you or that own you and your adjacent peers directly.
Division of laborTime is also a consideration, especially for smaller teams where IROs often wear many hats. When organizing conferences and additional events, prioritize those analysts who take the time to understand your company, who carry out regular fundamental research on both your company and your sector, and who are viewed as thought leaders by key investors.
Additionally, it’s important to understand and acknowledge that every analyst has his or her own way of working and each can bring something different to the table – this means an individual approach.
Scheduling for successEvents on the IR calendar present a tangible engagement opportunity with the sell side, but IROs need to ensure they’re capitalizing on every interaction. You have limited-time marketing, so look for ways to maximize efficiency. Meals catered before or after a conference or travel are an excellent way to reach several sell-siders and extend buy-side interest.
In addition, it's important to be clear and robust in ensuring that the event matches the objectives of the company. You should have a solid target list of who you would most like to meet with and, secondly, those you want to prioritize. It is imperative your key targets are included.
Evaluating your effortsEveryone would like ‘buy’ ratings for their company but a truer evaluation of how successful your sell-side engagements are is how accurate the analysts’ facts are about your company and whether they are understanding your disclosures and messaging.
Likewise, the value of being proactive in seeking feedback should not be underestimated. Your messaging should resonate, as seen in published research such as post-earnings and from events like investor days. A post-event perception study or survey is a great way to determine whether your objectives were met.
Engagement and coverageProactive engagement alongside effective targeting and a clear and compelling narrative are all important factors in boosting coverage, but for IROs still finding the sell side a tough nut to crack, here are a few quick ways to improve the quality of engagement.
Find your champion: Everyone has an analyst who stands out in research, engages with you, does his or her homework on the sector and promotes your firm and industry.
Patience is key: Recognize that building sell-side relationships is a long and tedious process that requires patience.
Be proactive, not reactive: Don’t wait for the phone to ring or for someone from the buy side or sell side to email you. Be intentional and build a rapport with those who follow your company closely – these relationships matter.
Keep it simple: If you have confusing or complicated metrics, disclosures or businesses, find a way to make it easier for outsiders to quickly interpret and digest.
