Next, to financial stability and growth potential, there are few things more important to a company than its reputation. When it’s seeking new investors or trying to keep existing ones happy, reputation and finances are closely intertwined. That is where investor relations – often known simply as IR – comes in. A specialist division of PR, its job is to make sure that the business is presented in the best possible light as far as investors are concerned, helping it to attain its optimum share price.
Understanding investors’ needs :
To keep investors happy, you need to understand what’s important to them. To an extent, this is straightforward: they need to know how their investment is faring and how the company is likely to do in the future, so need to be confident that they’re being kept up to date on relevant major issues. Beyond this, though, different investors have different concerns. In a big company with multiple investors, serving those needs can best be managed by dividing investors into groups and targeting them accordingly. It’s important to make sure that there is something useful for reaching everyone.
Attracting new investors :
Whether or not you’re actively looking for investment, it’s always useful to remain visible as an attractive prospect to the investment community. You’ll already have established to potential customers and this can be seen as a variant on that activity. IR should be focused on finding ways to connect with different groups of potential investors, to make your business look as attractive a prospect as possible and keep its profile high.
Managing investor involvement :
Some investors want to be more actively involved in running the companies they put their money into than others. Having a good relationship with major investors can be a boon, helping you to benefit from their expertise and to take advantage of their extensive networks of contacts. Sometimes, however, investors will disagree with what you think is best for the company. In recent years there has also been a developing phenomenon whereby groups of small investors get together to lobby for particular concerns, which can make life complicated for company directors. IR is responsible for initial communications in each of these eventualities.
Communication – getting it right :
Because not everything can be referred back to busy senior managers, IR teams have to be capable of managing the company line by themselves and tailoring messages as needed. Exactly how this is done will depend on the industry and the company’s own style, as standard practice varies across different sectors.
Conferences and events :
IR doesn’t just manage the day to day communications – it also plays a role in creating a good impression at conferences and events, and it may even put on investment roadshows to give existing and potential investors the chance to meet senior staff members. Every major public event is an opportunity to meet investors and IR will help you make the most of them.
Planning and reports :
Every company is obliged to produce some publicly available financial reports publicly available financial reports, and they have the potential to be flattering but also damaging if things are not going well. IR’s job is to draw attention to the good ones and spin the bad ones to minimize the damage they do. The right presentation can help to persuade worried investors that a downturn in your fortunes is only temporary, making them less likely to jump ship.
The benefits of a successful relationship :
As a rule, the most important thing to investors is straightforward communication that they know they can rely on. Sigurður Bollason has enjoyed very successful relationships with a number of companies he invested in simply because their owners took a positive, proactive approach to share information, and financial reports were delivered on time, so investors were kept up to date with the state of the company. Maintaining relations like this makes a good impression in itself and can tip the balance in your favor if investors are uncertain due to a downturn that you think will be brief.
In-house investor relations versus outsourcing :
With all this in mind, should you manage IR in-house or would it be better to outsource it to a specialist company? The latter is often the best option for smaller companies with limited resources. Specialists can be relied upon to contribute a high level of skill, but in-house work can be more flexible and enable you to respond more quickly to urgent situations. It also means that it’s easier for the IR team to be au fait with everything the company is doing.
Good investor relations can do a great deal to boost your company’s fortunes, so they’re well worth some investment in money and time.
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