Take a thoughtful approach to the IR calendar
Once companies have decided on their targeting goals, they need to incorporate those plans into their annual IR strategy and calendar.
A key element will be deciding the best way to make use of management time. This should be reserved for top shareholders and significant prospective investors that fit the firm's target profile, say IROs. Conferences and non-deal roadshows (NDRs) offer key moments to deliver your company’s message and secure one-on-one time with important targets.
The IR team at Equinix maps out the conferences it plans to attend at the beginning of the year, basing most of its decisions on past experience, says Chip Newcom, director of IR at the firm. ‘We test out, in any given year, a couple of conferences to see if there’s good traction there,’ he says. ‘But there are certain conferences we know are in high demand, with high-quality investors, that we’re always going to want to go to. From there, we use roadshows to target specific investors. Our approach for NDRs in the US is to rotate them around major financial centers.’
Investors are distracted during quarterly earnings. They’re going to be myopically focused on results and guidance
One of the mistakes newly public firms make is to be too hands-off outside of the earnings cycle, says Rodney Nelson, head of IR at Qualtrics. ‘Investors are distracted during quarterly earnings,’ he explains. ‘They’re going to be myopically focused on results and guidance, and will not really have the time to understand what’s happening strategically, product positioning or the important initiatives that will cut across.’
Rodney Nelson, Qualtrics
Filtering for targets When filtering investors for potential targets, many firms start with those invested in peers and the wider industry.
While that is undoubtedly a good way to search for new investors, there are other ways to think about targeting criteria, says Steve Adams of Clermont Partners. ‘I’m constantly telling clients to consider the financial profile of their company,’ he says. ‘That could be growth rate, revenue, margin, capital allocation or even the geographical footprint of the company.
‘For example, you could have two firms in completely different industries that don’t do anything similar but have a similar growth profile. I emphasize the point of looking at investment peers, as we might call them, as well as your traditional peer group. That can be a really rewarding exercise.’
Companies should also look for nuances about their particular story or management team that could serve as a targeting hook. ‘I’ve worked with clients that have a new CEO who came from a different industry,’ says Adams. ‘If Fidelity liked ‘Joe Schmo’ before, then maybe it will still like him at the new company. Using people as a connector can be helpful.’
