By Samantha Senna, director of IR at Q4, Inc
As the end of 2022 approaches, investor relations teams are beginning to reflect on their accomplishments for the year. This rapidly shifts into reviewing the IR strategy and developing plans for the upcoming year. Ideally, this effort is also tied to the company’s strategic planning cycle so that internal financial models driving perceived valuation can be revisited.
The role of IR professionals in helping the company with its corporate strategy is two-fold: IR teams are tasked not only with developing a clear and consistent messaging of the company’s strategy and business model to the investment community, but also with bringing investor feedback into the corporate and investor relations strategic discussion. Providing investment community perception to the management team and board of directors can reinforce the company’s strategic direction and help identify or resolve any deficiencies.
Confirming IR strategy, goals and messagingThe ultimate goal of the IR strategy is to achieve fair valuation. IR teams contribute to that by ensuring investors and capital market participants have appropriate information in order to analyze the company’s value proposition. In determining, constructing and communicating the company’s key strategic messaging, IR teams contribute to setting expectations of the investment community.
Although IR teams do not create the company’s value proposition, they have an active role in analyzing changes in the industry, competitive landscape and capital markets, along with consolidating feedback from investors and analysts. The analyses that come from a comprehensive understanding of the company’s value drivers relative to competitors and the industry are the foundation of the IR strategy, which should be intrinsically aligned with the corporate strategy.
Once the company’s strategy has been confirmed or revised, investor relations priorities can be aligned and goals can be set. IR teams then begin to work on the key messages and goals for the year. A compelling investment thesis is the heart of the IR strategy and can be crafted by looking at how the street perceives the company, its management team, its financial performance and its relative valuation. The company’s strengths and weaknesses versus its peer group will determine the investment thesis. The qualitative or quantitative IR goals are the outcome of the strategy and should be measurable and achievable in the desired timeframe. With the investment thesis validated and goals established, the focus will shift to building out the IR plan.
Creating the IR planThe IR annual plan takes into consideration the existing shareholder base, opportunities to target new investors and efforts to increase exposure to certain current investors. Building or maintaining a strong relationship with sell-side analysts, engaging with buy-side investors through participation in industry conferences and events, hosting headquarter visits or investor days, creating or updating the company investor overview deck and maintaining the IR website are all parts of a comprehensive IR plan. It is also helpful to review best practices related to IR websites and compare IR decks for best practices of peers or other benchmarks, which helps in crafting positioning and telling compelling stories.
Building out the IR calendarWith a plan and goals complete, most IR teams will shift focus to their IR calendar, which will provide the roadmap to achieve their IR goals. A program-wide calendar will include all required internal business activities, such as quarterly reporting dates, quiet periods and board and annual shareholder meeting dates.
With those mapped out, IR teams can then turn to planning the timing of meetings with the investment community, prioritizing the conferences, non-deal roadshows, office visits and headquarter meetings that maximize their efficient use of management time. This ensures events that conflict with their quiet periods or other business needs are avoided. It is critical to confirm management support for participation in IR meetings and events with both existing holders and targeted shareholders. This often must be done a year or more in advance to secure time on management calendars.
Getting it doneWith all components of the plan established, IR teams will budget for the execution of the plan, considering all the planned outreach, travel and service providers necessary to implement the plan and measure the IR team’s performance versus the plan.
This should all be part of a comprehensive IR program that integrates best practices in assessing stock performance relative to peers, monitoring relative trading volume and valuations, capturing competitive results and key topics influencing investor sentiment and tracking investor engagement and ownership.