IR Magazine Research Report - Corporate Access
The global voice of investor relations
<sub>Research Report</sub>
<H4>Corporate Access
Examining the logistics of engagement between companies
and the investment community
<sup>Sponsored by</sup>
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Introduction
Who did we survey?
The past few years have seen significant changes to corporate access. Regulation has limited the opportunities for access in some areas, while technological and service developments have increased opportunities elsewhere.
This report monitors the changing landscape by investigating the practices and views of IROs, investors and analysts. We look at how they go about arranging meetings with each other and which agents are commonly involved. We also examine their relative appreciation of these different methods, how this affects their access choices and what changes this has resulted in.
One of the key findings in this report is the rise – in both practice and appreciation – of direct contact between companies and investors. To highlight this we have dedicated a specific section of this report to comparing findings from IR professionals and investors on this issue.
This report is based on findings from the IR Magazine Global Investor Survey conducted in Q4 2020 and the IR Magazine Global IR Survey in Q1 2021. Data from the buy side and sell side is further broken down by geographical region, while information from IROs is broken down by region and company market capitalization. For the purposes of this report, market cap is defined as follows:
Small cap <$1 bn
Mid-cap $1 bn-$5 bn
Large cap $5 bn-$30 bn
Mega-cap >$30 bn
Total IRO respondents: 350
Total investor respondents: 149
Editor
Lloyd Bevan
Managing editor & chief copy editor
Kathleen Hennessy
Design and production executive
James Noden
The IRO view
IROs most satisfied with direct engagement
Almost half of the meetings IR teams hold with investors are arranged involving a sell-side corporate access desk. Globally, four in 10 meetings are arranged solely using sell-side corporate access and 7 percent are arranged in collaboration with both buy-side and sell-side corporate access desks.
The next most common way for IROs to arrange meetings with investors is by direct contact with the investor without any intermediary. This is the approach used for 37 percent of all meetings with investors. Other methods not involving sell-side corporate access or direct contact account for the arrangement of a much smaller proportion of investor meetings.
Regionally, North American IROs have the most direct contact with the buy side, with 42 percent of their investor meetings arranged this way. Asian IROs have the majority of their investor meetings arranged via the sell side, while 28 percent are arranged via direct contact with the investor.
According to company size, small-cap firms have the highest proportion of investor meetings arranged through direct contact and the lowest percentage involving the sell side. Mega-cap companies have the highest proportion of meetings arranged involving a buy-side corporate access desk.
IROs clearly prefer to arrange meetings directly with investors than to use any other method: 93 percent are satisfied with direct-contact arrangements, with 84 percent giving a high satisfaction rating of 8+/10 and a third giving a perfect score of 10.
Sell-side corporate access is the next most-favored way of arranging meetings, with 79 percent satisfied and 49 percent highly satisfied. All agents involved in arranging investor meetings receive a solid proportion of IROs highly satisfied. The highest level of dissatisfaction is with third parties other than the buy side or sell side, where 11 percent of IRO respondents give a score lower than five.
Arranging meetings directly with investors is the most-favored approach by IR professionals in every region, with 97 percent of European IROs satisfied with this method and at least eight in 10 in every region giving a high satisfaction rating of eight or above. No European or Asian IROs express any dissatisfaction with this method, while just one in 50 North Americans do.
Arranging meetings via sell-side corporate access is the next most-appreciated method by European and Asian IROs, while European IROs give the highest satisfaction rating of any region to using buy-side corporate access. Arranging meetings using both buy-side and sell-side corporate access is least favored by North American IROs.
Satisfaction for arranging meetings directly with the investor tends to increase with company size. All mega-cap IRO respondents express satisfaction with this method, while the number giving a perfect satisfaction score of 10 rises from 23 percent of small-cap IROs to 51 percent of mega-caps.
Broadly, satisfaction with all methods of arranging investor meetings increases with cap size, with satisfaction levels for all methods being notably lower among small-cap IROs than IROs at all other cap sizes, except for meetings arranged via another third party, where the lowest satisfaction rating is to be found among large-cap IROs.
Just 4 percent of small-cap IROs give a perfect score of 10 for arranging meetings through buy-side and sell-side corporate access together, through the sell side on its own or through another third party.
The past few years have seen a considerable rise in direct contact between IROs and investors. More than three quarters of IROs are more likely to both reach out to investors and to respond to direct investor contact, with 46 percent saying they are much more likely to respond to investors. Only 4 percent are less likely to reach out to investors and 1 percent less likely to respond to investors.
These findings are consistently strong across every region, with Asian IROs slightly less likely to reach out to investors and North American IROs slightly less likely to respond to investor contact than IROs in other regions. According to company size, small and large-cap IROs are more likely to reach out to investors, while small and mega-cap IROs are more likely to respond to investors.
Over the past few years, have you become more or less likely to do the following?
When asked to comment on how their attitude to corporate access has changed over the past few years, the most common issue IROs mention is the increase in direct contact. While this is often seen as a response to the changing nature of corporate access, it is mainly viewed positively by IROs.
A decline in the sell-side role is also frequently mentioned. A few respondents mention a decline in quality but most simply think sell-side corporate access is no longer needed as much as before. While some IROs see no change in corporate access, other issues mentioned include virtual meetings, increased buy-side engagement in general and quality of meetings.
Over the past few years, how has your attitude to corporate access changed?
Asia and Europe
North America and rest of world
View from the buy side
Buy siders favor sell-side corporate access
Less than 25 percent of buy-side investors and analysts polled work in organizations with a dedicated corporate access desk, which means more than three quarters do not have this facility available to them. The portion with an in-house corporate access desk rises to 30 percent in North America and 29 percent in Asia, so the lower global number is due to just 6 percent of European buy-siders having availability in their organization.
Does your organization have a corporate access desk?
Just under half of meetings with companies are arranged using sell-side corporate access, making it the most-used method by buy-side respondents. Four in 10 meetings are arranged directly with the company and this is clearly the second-most common means of arrangement.
Direct contact is less common in Europe than in North America or Asia. It is the most common way for the North American buy side to arrange meetings.
As fewer than a quarter of buy-siders have access to an in-house corporate access desk, the overall numbers using them are low. Where access to such facilities does exist, however, they are the most-used arrangement, with 43 percent of meetings involving them. The majority of buy-side corporate access desks are in North America.
What percentage of your meetings are arranged involving the following parties?
Direct contact is the most successful way to arrange meetings, with almost half of buy-side respondents saying they are much more likely to take a meeting with a company if the company approaches them directly rather than using a third party. Only 8 percent say they would be less likely, with 19 percent stating that it would not make a difference.
Arranging meetings through a buy-side corporate access desk also has a high success rate. Although only 23 percent of buy-siders have access to such a facility in their work, 45 percent say they would be more likely to take a meeting this way, compared with 18 percent who say they would be less likely. Going through a non-buy-side or sell-side third party is the only method of arrangement where more buy-side respondents say they would be less likely to take a meeting.
Comparing the following methods of corporate access, how much more or less likely are you to take a meeting?
Taking meetings by region
Although direct contact is the most successful means of arranging meetings in every region, it is slightly less so in Europe than in North America or Asia. Among European buy-siders, 16 percent say direct contact would make them less likely to take a meeting, compared with none in North America and just 4 percent of Asian respondents.
Asian fund managers and buy-side analysts are the most appreciative of conventional sell-side corporate access, with more than half saying such approaches make them more likely to take a meeting. North American buy-side respondents are the most neutral and Europeans the most hostile toward sell-side corporate access.
Buy-side corporate access is more popular than sell-side access in North America. Of those who have an in-house corporate access desk, more than half of North American buy-siders are more likely to take a meeting arranged this way, compared with 20 percent who favor conventional sell-side corporate access and 29 percent who are more likely to take a meeting when it is arranged by both the buy side and the sell side.
More than six in 10 buy-side investors and analysts have, over the past few years, become more likely to reach out to companies directly to arrange meetings, with three in 10 saying they have become much more likely. At the same time, more than half are more likely to respond to direct company outreach, compared with just 5 percent who say they have become less likely.
The trend for reaching out directly to companies is consistent in every region, while the trend for responding to company outreach is slightly lower in Asia and slightly higher among European buy-siders.
Over the past few years, have you become more or less likely to:
View from the sell side
Increased workloads for
sell-side corporate access
Changes to corporate access workload
Despite the clear increase in direct contact between company and investor and the emergence of buy-side corporate access desks, seven in 10 sell-side respondents say the volume of corporate access work has increased in their organization over the past two years, with 23 percent reporting a strong increase. It is also made clear that this trend existed prior to the Covid-19 pandemic.
Regionally, this trend is most prominent in Europe where 92 percent of sell-siders have seen an increase in corporate access in the past two years, 71 percent prior to the Covid-19 pandemic. In North America the trend drops slightly with Covid-19, as prior to the pandemic more sell-side respondents were witnessing an increase than have done so over the course of the whole past two years.
How has the volume of work on your corporate access desk changed in the past two years?
How was the work changing prior to the Covid-19 pandemic?
Engaging with buy-side corporate access
More than half of sell-side respondents to our survey engage with buy-side corporate access facilities in the course of their work. Regionally, this figure is exactly half in North America and Europe. It is in Asia where engagement is highest, with almost two thirds of Asian sell-siders saying they work with buy-side corporate access.
In your work, do you engage with buy-side corporate access?
Changes to buy-side engagement
Sell-side respondents are broadly mixed about whether they expect to see changes in their engagement with buy-side corporate access in the future. While a third expect this relationship to change, 39 percent expect no change and 28 percent are unsure.
Asia again appears to be the most dynamic region, with half expecting their relationship with buy-side corporate access to change and less than a third expecting no change. Only 13 percent of European sell-siders are anticipating a change, almost half expect no change and four in 10 are not sure.
Do you expect your relationship with buy-side corporate access to change in the future?
The rise of direct contact
Direct engagement should continue to increase
The rise of direct contact
Direct contact level and appreciation
The most significant finding in this report is the importance of direct contact between company and investor, how appreciated this is by both parties and how much this has changed over the past few years.
Direct contact is the second-most common method of arranging meetings after sell-side corporate access, with IROs saying this method accounts for the arrangement of more than a third of their meetings and investors saying it accounts for four in 10 of theirs.
IRO satisfaction with arranging meetings directly with investors is overwhelmingly positive, with 93 percent giving a satisfaction rating of above five. Included in this are 84 percent of IROs who give a high satisfaction rating of eight or above and a third who give a perfect score of 10.
The primary reason for this satisfaction is clear when looking at the view from the buy side: nearly three quarters of buy-side investors and analysts say they are more likely to take a meeting if arranged by direct contact with the company, while nearly half say they are much more likely to do so.
Direct contact level and appreciation
Changes in direct engagement
Nearly eight in 10 IROs say they have become more likely to reach out to investors over the past few years, with just under four in 10 saying they have become much more likely. This outreach has been received positively by investors, as 54 percent have become more likely to respond to direct approaches from companies, with nearly a quarter being much more likely to respond.
Investors themselves have become more proactive with direct engagement. More than six in 10 have become more likely to directly reach out to companies, with three in 10 much more likely. Understandably, the engagement has been welcomed by IROs, with three quarters having become more likely to respond to investor outreach and 46 percent much more likely to do so.
Over the past few years, have you become more or less likely to do the following?
Comments on direct engagement
When both IROs and investors are asked to comment on direct engagement and what it means, they often state this as an existential fact, a new reality in the changing face of corporate access. Where they express sentiment toward direct engagement, it is generally positive.
The relative decline of sell-side corporate access from the dominant position it once held is viewed primarily with acceptance rather than appreciation or regret. Both IROs and investors appear to embrace what they see as new opportunities afforded to them by increased direct engagement.
Some buy-side outfits, particularly in North America, have developed in-house corporate access facilities. Where this is the case, the buy-side corporate access desk often takes over from direct contact. Most buy-side corporate access differs from sell-side corporate access in that it is often more to do with logistics and co-ordination than targeting and research. Both IROs and investors appreciate direct engagement, and in-house buy-side corporate access operations would do well to take note of this.
North America and rest of world
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