Posted on September 29th, 2023. Posted by Bob East
Properly positioning your story within the investment community can help you build a quality, long-term shareholder base and enhance equity market value. To develop an effective investor relations strategy, you must understand how to best interact with investors, stay visible, and adapt to deliver both good news and bad.
Westwicke has partnered with public companies for nearly 20 years, helping them effectively communicate with the Street. Below, we’ve compiled a list of best practices to engage in when it comes to your investor relations strategy.
- Cover both the good and the bad. It is easy to highlight the positive news and trends impacting your company and to gloss over the negatives. The best companies do a great job providing balanced information.
- Stay visible. After reporting a mixed quarter, it is important to maintain a dialog with your shareholders. Investors want to be reassured by the senior management that you are on top of managing the company.
- Adapt. Recognize that the metrics you provide to the Street need to evolve to best demonstrate the health of your business and to allow the investment community to gauge your progress.
- Don’t wing it.Prepare thoroughly for your earnings calls. What you say and how you say it is really important on quarterly calls and during investor meetings. Practice your delivery and make sure your team is prepared to answer any and all follow-up questions.
- Target the correct accounts. When setting up a marketing trip, be thoughtful about whom you want to target. Balance existing and potential shareholders and don’t exclude hedge funds. Hedge funds have significant assets and can be valuable, long-term shareholders.
- Treat analysts and portfolio managers as equals. In the investment process, analysts and portfolio managers should be seen as equals. Senior management should strive to meet with both.
- Ignore the stock rating. Ratings are temporary and change over time. Just because an analyst has a “hold” rating on your company doesn’t mean management should cut off communication.
- Mix up management. As you plan your marketing trips, plan to occasionally bring along members of senior management other than the CEO and CFO. This can include a division head, your chief medical officer, or your chief scientific officer. This showcases the depth of your management team and allows investors to get a different/broader perspective on your business.
- Be quick to respond. The best companies quickly assess the impact of any potential bad news and proactively communicate it to their shareholders.
- Provide guidance. The best companies recognize that increased transparency is key to attaining a premium valuation.
For a deeper dive into how to develop an effective investor relations strategy, download our eBook, “Investor Relations Primer: The Basics of an Effective Plan.”
Bob East co-founded Westwicke is 2006. Since then, Bob has managed the firm’s strategic direction and led Westwicke's healthcare services and HCIT practice. He has worked with companies representing all aspects of the healthcare services spectrum. Bob received a BA in finance from Loyola College in Baltimore.
View full bio | Other posts by Bob East
FAQs
In any successful IR strategy, building credibility with both the buy and sell-side of the financial community is paramount. Start by ensuring that your narrative is straightforward and maintain a consistent message. Always keep in mind that you are “narrating” a story rather than aggressively “selling” it.
How to excel in investor relations? ›
To be effective in IR, you need to understand the financial performance and outlook of your company, as well as the industry trends and competitive landscape. You should be familiar with the key financial statements, ratios, metrics, and terminology that investors and analysts use to evaluate your company.
How to prepare for an investor relations interview? ›
Prepare Your Own Questions: Have a list of insightful questions ready to ask the interviewer. This could include questions about the company's investor relations strategy, expectations for the role, or recent financial events.
What are the 4 key principles of investors in people? ›
IiP has three principles – Plan, Do, Review – and ten indicators. In 2009 the IiP standard was reviewed to enable organisations to concentrate on high-priority indicators and work to improve these areas first. See more on the IiP website. Some evidence suggests that organisations adopting IiP gain benefit.
What are the 3 goals of an investor? ›
Once you've answered those questions, you can begin to weigh the three primary investment goals--growth, income, and stability or protection of principal--to determine how to select specific investments that are appropriate for your financial plan.
Why are investor relations difficult? ›
To advance, you need to make the executives happy with your performance and build good relationships with institutional investors. As with advancement at all large companies, the key challenge is getting “credit” for your accomplishments, as the environment is bureaucratic and highly political.
How much do SVP investor relations make? ›
The estimated total pay for a SVP Investor Relations is $453,433 per year in the United States area, with an average salary of $223,436 per year.
What is the main role of investor relations? ›
The investor relations (IR) department is a division of a business whose job it is to provide investors with an accurate account of company affairs. IR departments are required to be tightly integrated with a company's accounting department, legal department, and executive management team.
What does good investor relations look like? ›
Key functions of investor relations
Manage and align expectations via clear, consistent dialogue with the markets around earnings, net debt levels, shareholder remuneration, corporate strategy, and market conditions. Maintain relationships and communications with analysts.
Do investor relations pay well? ›
While ZipRecruiter is seeing annual salaries as high as $231,500 and as low as $33,000, the majority of Investors Relations salaries currently range between $82,500 (25th percentile) to $153,000 (75th percentile) with top earners (90th percentile) making $175,000 annually across the United States.
Investor Relations Analysts often navigate high-stakes environments, balancing the expectations of stakeholders with market fluctuations. This role demands acute attention to financial detail, clear communication, and swift responsiveness to economic events, which can be inherently stressful.
What is the goal of investor relations? ›
While IR is similar to public relations in that it focuses on communication, it differs from public relations in its purpose, which is to help investors make appropriate decisions regarding buying or selling of company stock.
